Institutional Investors and Equity Prices
Paul A. Gompers
Harvard Business School - Finance Unit; Harvard University - Entrepreneurial Management Unit; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)
Yale School of Management; National Bureau of Economic Research (NBER)
Quarterly Journal of Economics, Vol. 116, No. 1, pp. 229-259, February 2001
This paper analyzes institutional investors' demand for stock characteristics and the implications of this demand for stock prices and returns. We find that "large" institutional investors nearly doubled their share of the stock market from 1980 to 1996. Overall, this compositional shift tends to increase demand for the stock of large companies and decrease demand for the stock of small companies. The compositional shift can, by itself, account for a nearly 50 percent increase in the price of large-company stock relative to small-company stock and can explain part of the disappearance of the historical small-company stock premium.
Number of Pages in PDF File: 42
JEL Classification: G20, G11, G32Accepted Paper Series
Date posted: June 1, 1998
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo3 in 0.609 seconds