Title

Institutional ownership, analyst following, and share prices

Authors

Authors

C. S. Fernando; V. A. Gatchev;P. A. Spindt

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Bank Financ.

Keywords

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

Abstract

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 Title

Journal of Banking & Finance

Volume

36

Issue/Number

8

Publication Date

1-1-2013

Document Type

Article

Language

English

First Page

2175

Last Page

2189

WOS Identifier

WOS:000305865800001

ISSN

0378-4266

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