Is individual trading priced in the preferred stock discount?

Cheol Park, Paul Moon Sub Choi and Joung Hwa Choi

Emerging Markets Review, 2019, vol. 38, issue C, 326-346

Abstract: Individuals have long been blamed for noise trader risk. Moreover, the literature suggests that the discount of preferred shares against comparable common equities is due to dual-class differences in dividend yield, voting rights, management control, and turnover. In this paper, we argue and present evidence that noise trader risk, as proxied by the individual trading weight, explains the preferred stock discount observed in the Korean stock market after controlling for the conventional determinants. This main result and additional considerations empirically support the presence of noise trader risk.

Keywords: Preferred stock discount; Noise trader risk; Individual trading weight (search for similar items in EconPapers)
JEL-codes: G12 G15 G32 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:38:y:2019:i:c:p:326-346

DOI: 10.1016/j.ememar.2018.03.006

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