We show that distribution of stock dividends is costly to stockholders of levered firms. In addition, it is associated with reductions in future profits. Yet consistent with past studies, we document positive and significant announcement returns for the 1954-2017 period, perhaps responding to...

We examine the behavior of call options surrounding the underlying stock's ex-dividend date. The evidence is inconsistent with the predictions of a rational exercise policy; a significant fraction of the open interest remains unexercised, resulting in a windfall gain to option writers. This...