Shareholder Perks, Ownership Structure, and Firm Value
64 Pages Posted: 9 Jun 2015 Last revised: 16 Aug 2018
Date Written: August 12, 2018
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: Suggested Citation