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Number of Shareholders and Stock Prices: Evidence from Japan
Author(s) -
Amihud Yakov,
Mendelson Haim,
Uno Jun
Publication year - 1999
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.00141
Subject(s) - shareholder , stock (firearms) , market liquidity , stock price , monetary economics , business , cost price , restricted stock , stock dilution , growth stock , financial economics , economics , finance , stock market , corporate governance , mechanical engineering , paleontology , horse , series (stratigraphy) , engineering , biology
Merton (1987) proposes that an increase in a firm's investor base increases the firm's value. In Japan, companies can reduce their stock's minimum trading unit—the number of shares in a “round lot”—which facilitates trading in the stock by small investors. We find that a reduction in the minimum trading unit greatly increases a firm's base of individual investors and its stock liquidity, and is associated with a significant increase in the stock price. Further, the stock price appreciation is positively related to an increase in the number of shareholders.