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My understanding is that the stock price is actually adjusted downward by the per/share dividend on the ex-dividend date. For regular small dividends this change is not really noticible in the noise of regular trading but for large/special dividends it is.

For example, look at the historical stock prices for Microsoft in 2004 when they issued a $3.08/share dividend: http://finance.yahoo.com/q/hp?s=MSFT&a=10&b=1&c=...

You can see that the difference between the close on Nov 12 and the open on Nov 15 is $2.63 where the difference in the surrounding days in about 20 times less.



This is correct, but the thread is about changes in dividend policy, not ex-dividend dates.




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