How do firms attract the attention of individual investors? Shareholder perks and financial visibility

Yoshiaki Nose, Hisao Miyagawa and Akitoshi Ito

Journal of Behavioral and Experimental Finance, 2021, vol. 31, issue C

Abstract: Shareholder perks are packages of benefits offered to shareholders who own a threshold number of firm shares. We test and confirm the hypothesis that shareholder perks programs in Japan provide mechanisms to increase firm visibility for individual investors through stock-price run-ups and increased trading volume just before the ex-perks date. First, firms having perks programs experience a significant price run-up toward the ex-perks date. Second, the observed price run-ups are significantly higher for stocks having tighter short-selling restrictions. Third, trading volumes and balances of short interests rise significantly just before the ex-perks date. The latter suggests active cross trades, wherein investors hedge price risk. Fourth, the results from the multivariate regression are also consistent with the hypothesis.

Keywords: Financial visibility; Shareholder perks; Short-selling restrictions; Trading volume (search for similar items in EconPapers)
JEL-codes: G14 G32 G40 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000642

DOI: 10.1016/j.jbef.2021.100520

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