Shareholder Perks and Firm Value
Forthcoming, The Review of Financial Studies
47 Pages Posted: 9 Jun 2015 Last revised: 6 Jul 2021
Date Written: January 13, 2021
Shareholder perks are in-kind gifts or purchase discounts that disproportionately reward small shareholders. Data from Japanese firms indicate that firms initiating perk programs attract individual retail shareholders and experience increases in share values. We find support for three channels by which perks increase firm value: an increase in share liquidity, a decrease in the equity cost of capital, and signaling to investors. A fourth channel, by which perks help to market the firm’s products to consumers, receives mixed support. We do not find evidence that perk programs work to entrench managers.
Keywords: Shareholder perks, retail investors, share liquidity, cost of capital, signaling
JEL Classification: G14, G30, G35
Suggested Citation: Suggested Citation