Nominal Stock Price Anchors: A Global Phenomenon?
71 Pages Posted: 25 Mar 2015 Last revised: 17 Feb 2017
Date Written: November 18, 2016
Weld, Michaely, Thaler, and Benartzi (2009) find that the average nominal stock price on the New York Stock Exchange and the American Stock Exchange has been approximately $25 since the Great Depression. They report that this “nominal price fixation is primarily a U.S. or North American phenomenon.” Using a larger data set from 38 countries, we show that nominal prices of most stocks tend to revert to their initial public offer (IPO) prices. IPO prices are natural anchors because they are the first public prices observed by investors. We demonstrate that corporate actions maintain these nominal stock price anchors.
Keywords: anchoring, norms, nominal share price
JEL Classification: G02, G14, G15
Suggested Citation: Suggested Citation