The Anomaly of 28 Days Between the Ex-Dividend and Payment Dates in Taiwanese Stock Markets

Abstract

After 16 years of suspension during the leadership of Steve Jobs, Apple now pays cash dividends. Since the death of Jobs, Apple has distributed twelve quarterly dividends. Of these, cash was paid 7 days after the ex-dividend date on ten occasions, and twice after 8 days. It has been well documented that individuals prefer numbers with salient final digits, such as 0 and 5, when making quantitative decisions. These phenomena motivates us to examine if 7 is a salient number (in other words, a weekly cycle effect is at work) in determining the period between the ex-dividend and payment dates. Since Taiwanese firms pay annual dividends, we conjecture that in Taiwan a period of 28 days is the most common period chosen for annual dividend distribution. This conjecture is verified and we provide evidence that the period decision is mainly affected by weekly cycle effect, and liquidity discretion. The periods are clustering around multiples of 7 from 21 to 49 days. We advance that the cycle of weekdays governs our daily life, just as two hands and ten fingers characterize our human body. Subsequently, we propose a behavioral and heuristic argument to explain why market participants are prone to number with final digits of 0, 5, and even numbers when making quantitative decisions.