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Catering Through Nominal Share Prices
Malcolm Baker
Robin Greenwood
Jeffrey Wurgler
出版
National Bureau of Economic Research
, 2008
URL
http://books.google.com.hk/books?id=UP9MnQEACAAJ&hl=&source=gbs_api
註釋
We propose and test a catering theory of nominal stock prices. The theory predicts that when investors place higher valuations on low-price firms, managers will maintain share prices at lower levels, and vice-versa. Using measures of time-varying catering incentives based on valuation ratios, split announcement effects, and future returns, we find empirical support for the predictions in both time-series and firm-level data. Given the strong cross-sectional relationship between capitalization and nominal share price, an interpretation of the results is that managers may be trying to categorize their firms as small firms when investors favor small firms.