When a Master Dies: Speculation and Asset Float

Review of Financial Studies, Forthcoming

65 Pages Posted: 4 Jun 2019 Last revised: 14 Jan 2021

See all articles by Julien Pénasse

Julien Pénasse

University of Luxembourg

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

José A. Scheinkman

Columbia University; Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 25, 2020


The death of an artist constitutes a negative shock to his future production; it permanently decreases the artist’s float. We use this shock to test predictions of speculative trading models with short-selling constraints. Symmetrically to Hong et al. (2006), where an increase in float decreases turnover and price, an artist’s premature death leads to an increase in prices and turnover. We document that, as predicted by our model, premature death increases prices (54.7%) and secondary market volume (63.2%) permanently, and this effect is larger if an artist dies young or is more famous.

Keywords: Speculative Bubbles, Asset Float, Short-Sales Constraints, Heterogeneous Beliefs, Art Auction

JEL Classification: G12, P34, Z11, D44

Suggested Citation

Pénasse, Julien and Renneboog, Luc and Scheinkman, José, When a Master Dies: Speculation and Asset Float (September 25, 2020). Review of Financial Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3385460 or http://dx.doi.org/10.2139/ssrn.3385460

Julien Pénasse (Contact Author)

University of Luxembourg ( email )

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Luc Renneboog

Tilburg University - Department of Finance ( email )

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José Scheinkman

Columbia University ( email )

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