Institutional ownership, analyst following, and share prices
Abbreviated Journal Title
J. Bank Financ.
Institutional ownership; Monitoring; Analysts; Financial intermediation; Share price level; Firm value; MUTUAL FUND PERFORMANCE; BID-ASK SPREADS; STOCK SPLITS; TOBIN-Q; PORTFOLIO DIVERSIFICATION; SHAREHOLDER ACTIVISM; CORPORATE GOVERNANCE; EQUITY PRICES; TICK SIZE; INVESTORS; Business, Finance; Economics
We study the mutual relationships between institutional ownership, analyst following and share prices. We show that the pressure on firms to set lower share prices to attract analysts is attenuated by institutional monitoring. Our theory refutes the assumed causal relation between share price and institutional ownership, attributed to the share price-liquidity relation, and we show empirically that share prices and institutional ownership are positively related after controlling for liquidity. Our study provides a rationale for why better firms generally maintain higher share price levels, and offers new insights into the puzzling empirical linkages observed between nominal share price levels and firm fundamentals. (C) 2012 Elsevier B.V. All rights reserved.
Journal of Banking & Finance
"Institutional ownership, analyst following, and share prices" (2013). Faculty Bibliography 2010s. 2620.