Shareholder Perks, Ownership Structure, and Firm Value

64 Pages Posted: 9 Jun 2015 Last revised: 16 Aug 2018

See all articles by Jonathan M. Karpoff

Jonathan M. Karpoff

University of Washington - Michael G. Foster School of Business

Robert J. Schonlau

Miami University - Farmer School of Business

Katsushi Suzuki

Hitotsubashi University - Graduate School of International Corporate Strategy

Date Written: August 12, 2018

Abstract

Shareholder perks are in-kind gifts or purchase discounts that disproportionately reward small shareholders. Using data from Japanese firms, we show that firms initiating perk programs increase their ownership base by attracting small individual shareholders. These firms also experience an increase in value, an increase in share liquidity, and a decrease in the equity cost of capital. We find no evidence that perk programs work primarily to serve managers’ private interests. Together, the evidence indicates that perk programs serve shareholders’ interests at the firms that adopt them, by decreasing the transaction and information costs that affect shareholders’ portfolio choices and returns.

Keywords: Shareholder perks, investor base, share liquidity, cost of capital

JEL Classification: G14, G30, G35

Suggested Citation

Karpoff, Jonathan M. and Schonlau, Robert J. and Suzuki, Katsushi, Shareholder Perks, Ownership Structure, and Firm Value (August 12, 2018). Available at SSRN: https://ssrn.com/abstract=2615777 or http://dx.doi.org/10.2139/ssrn.2615777

Jonathan M. Karpoff (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353226
Seattle, WA 98195-3200
United States
206-685-4954 (Phone)
206-221-6856 (Fax)

Robert J. Schonlau

Miami University - Farmer School of Business ( email )

Oxford, OH 45056
United States

Katsushi Suzuki

Hitotsubashi University - Graduate School of International Corporate Strategy ( email )

2-1-2 Hitotsubashi
Chiyoda-ku,
Tokyo, 101-8439
Japan

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