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

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  • Nose, Yoshiaki
  • Miyagawa, Hisao
  • Ito, Akitoshi

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.

Suggested Citation

  • Nose, Yoshiaki & Miyagawa, Hisao & Ito, Akitoshi, 2021. "How do firms attract the attention of individual investors? Shareholder perks and financial visibility," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000642
    DOI: 10.1016/j.jbef.2021.100520
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    More about this item

    Keywords

    Financial visibility; Shareholder perks; Short-selling restrictions; Trading volume;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G40 - Financial Economics - - Behavioral Finance - - - General

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