Shareholder Perks and Firm Value

Forthcoming, The Review of Financial Studies

47 Pages Posted: 9 Jun 2015 Last revised: 6 Jul 2021

See all articles by Jonathan M. Karpoff

Jonathan M. Karpoff

University of Washington - Michael G. Foster School of Business; European Corporate Governance Institute (ECGI)

Robert J. Schonlau

Colorado State University, Fort Collins - Department of Finance & Real Estate

Katsushi Suzuki

Hitotsubashi University - Graduate School of International Corporate Strategy

Date Written: January 13, 2021

Abstract

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

Karpoff, Jonathan M. and Schonlau, Robert J. and Suzuki, Katsushi, Shareholder Perks and Firm Value (January 13, 2021). Forthcoming, The Review of Financial Studies, 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)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Robert J. Schonlau

Colorado State University, Fort Collins - Department of Finance & Real Estate ( email )

Fort Collins, CO 80523
United States
9704916280 (Phone)
80523 (Fax)

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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