DO DIVIDEND BASED TRADING RULES OUTPERFORM THE INDICES: EVIDENCE FROM FINLAND AND SWEDEN

This project adds empirical evidence to the literature on whether international equity markets are efficient or if market overreaction creates exploitable stock trading rules. Specifically, we examine whether dividend-yield based trading rules can be used on two Nordic stock exchanges to outperform bench-mark indexes. These rules rely on building portfolios from the stocks with the highest dividend yields and rebalancing annually. Empirical testing suggests that both raw and risk-adjusted returns from the trading rules exceed those of the index.