Nominal Stock Price Anchors: A Global Phenomenon?

Kee-Hong Bae (), Utpal Bhattacharya (), Jisok Kang () and S. Ghon Rhee ()
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Kee-Hong Bae: Schulich School of Business, York University, North York, Ontario, Canada, M3J 1P3
S. Ghon Rhee: Financial Economics and Institutions Department, University of Hawaii at Manoa, Shidler College of Business, Honolulu, HI 96822, USA

No 2019-64, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

Abstract: Weld, Michaely, Thaler, and Benartzi (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 are displayed in Euros.

Pages: 34 pages
Date: 2019-05, Revised 2019-05
New Economics Papers: this item is included in nep-fmk
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Citations: View citations in EconPapers (1)

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Journal Article: Nominal stock price anchors: A global phenomenon? (2019)
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