Nominal stock price anchors: A global phenomenon?

Kee-Hong Bae, Utpal Bhattacharya (), Jisok Kang () and S. Ghon Rhee

Journal of Financial Markets, 2019, vol. 44, issue C, 31-41

Abstract: Weld et al. (2009) find that the average nominal U.S. stock price has been approximately $25 since the Great Depression. They report that this “nominal price fixation is primarily a U.S. or North American phenomenon.” Using a larger data set from 38 countries, we show that this nominal price fixation is a global phenomenon. We exploit the introduction of the euro in 1999 to show that stock splits maintain these nominal stock price anchors. Generally, firms in countries with larger drops in nominal prices had fewer stock splits after stock prices were displayed in euros.

Keywords: Anchoring; Norms; Nominal share price; Stock splits; Reverse stock splits (search for similar items in EconPapers)
JEL-codes: G02 G14 G15 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Nominal Stock Price Anchors: A Global Phenomenon? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:44:y:2019:i:c:p:31-41

DOI: 10.1016/j.finmar.2018.12.006

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