Title

Institutional Ownership, Analyst Following, And Share Prices

Keywords

Analysts; Financial intermediation; Firm value; Institutional ownership; Monitoring; Share price level

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. © 2012 Elsevier B.V.

Publication Date

8-1-2012

Publication Title

Journal of Banking and Finance

Volume

36

Issue

8

Number of Pages

2175-2189

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/j.jbankfin.2012.03.026

Socpus ID

84862196748 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84862196748

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