The Chipotle Paradox

16 Pages Posted: 4 Dec 2015

See all articles by Mark Fedenia

Mark Fedenia

University of Wisconsin - Madison - Department of Finance, Investment and Banking

Mark Hirschey

University of Kansas

Multiple version iconThere are 2 versions of this paper

Date Written: November 23, 2015


Chipotle Mexican Grill, Inc. Class A common stock has one vote per share and Class B common stock has 10 votes per share. In a pricing paradox, the Chipotle Class A shares with inferior voting rights have sold at a persistent price premium of as much as 20% more than superior Class B shares. This paradox cannot be simply explained. Both classes of shares are actively traded on the NYSE, widely held, and closely followed on Wall Street by sophisticated institutional investors. The company is also a national concern that offers easy-to-understand products. The Chipotle Paradox suggests that patterns in stocks prices sometimes persist that are inconsistent with the law of one price and contrary to the efficient market hypothesis. The Chipotle Paradox also gives support to Lamont and Thaler’s (2003a) contention that optimists can misprice faddish stocks when not enough rational investors are willing to meet excess demand by selling short.

Suggested Citation

Fedenia, Mark A. and Hirschey, Mark, The Chipotle Paradox (November 23, 2015). Journal of Applied Finance (Formerly Financial Practice and Education), Vol. 19, No. 1&2, 2009. Available at SSRN:

Mark A. Fedenia (Contact Author)

University of Wisconsin - Madison - Department of Finance, Investment and Banking ( email )

975 University Avenue
Madison, WI 53706
United States
608-263-4502 (Phone)
608-265-3495 (Fax)

Mark Hirschey

University of Kansas ( email )

School of Business
1300 Sunnyside Ave.
Lawrence, KS 66045-7585
United States
785-864-7563 (Phone)
785-864-5328 (Fax)


Register to save articles to
your library


Paper statistics

Abstract Views
PlumX Metrics