Does Joining the S&P 500 Index Hurt Firms?

Benjamin Bennett, René M. Stulz and Zexi Wang

No 27593, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the impact on firms of joining the S&P 500 index from 1997 to 2017. We find that the positive announcement effect on the stock price of index inclusion has disappeared and the long-run impact of index inclusion has become negative. Inclusion worsens stock price informativeness and some aspects of governance. Compensation, investment, and financial policies change with index inclusion. For instance, payout policies of firms joining the index become more similar to the policies of their index peers. ROA falls following inclusion. There is no evidence of an impact of inclusion on competition.

JEL-codes: G11 G14 G23 G31 G32 G35 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-cfn
Note: CF
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