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Number of Shareholders and Stock Prices: Evidence from Japan

Author

Listed:
  • Yakov Amihud

    (Stern School of Business, New York University and at the Faculty of Management, Tel Aviv University,)

  • Haim Mendelson

    (Graduate School of Business, Stanford University,)

  • Jun Uno

    (NIKKEI QUICK Information Technology Co. Ltd., Tokyo, Japan)

Abstract

Merton (1987) proposes that an increase in a firm's investor base increases the firm's value. In Japan, companies can reduce their stock's minimum trading unit-the number of shares in a "round lot"-which facilitates trading in the stock by small investors. We find that a reduction in the minimum trading unit greatly increases a firm's base of individual investors and its stock liquidity, and is associated with a significant increase in the stock price. Further, the stock price appreciation is positively related to an increase in the number of shareholders. Copyright The American Finance Association 1999.

Suggested Citation

  • Yakov Amihud & Haim Mendelson & Jun Uno, 1999. "Number of Shareholders and Stock Prices: Evidence from Japan," Journal of Finance, American Finance Association, vol. 54(3), pages 1169-1184, June.
  • Handle: RePEc:bla:jfinan:v:54:y:1999:i:3:p:1169-1184
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