Dividend policies and investor behavior

Abstract

This bachelor’s thesis will examine whether the implementation of a certain strategy around the exdividend date is worthwhile. The starting point of this paper is the model derived by Miller and Modigliani (1961) under highly simplifying assumptions on the irrelevance of dividend policy for the market value of the firm. Various studies have a contrary approach or examine market imperfections. Furthermore, private investors have many assumptions concerning dividends. Previous research on behavioral finance explains some investment decisions and biases investors have.