TY - JOUR
T1 - Is individual trading priced in the preferred stock discount?
AU - Park, Cheol
AU - Choi, Paul Moon Sub
AU - Choi, Joung Hwa
N1 - Publisher Copyright:
© 2018 Elsevier B.V.
PY - 2019/3
Y1 - 2019/3
N2 - Individuals have long been blamed for noise trader risk. Moreover, the literature suggests that the discount of preferred shares against comparable common equities is due to dual-class differences in dividend yield, voting rights, management control, and turnover. In this paper, we argue and present evidence that noise trader risk, as proxied by the individual trading weight, explains the preferred stock discount observed in the Korean stock market after controlling for the conventional determinants. This main result and additional considerations empirically support the presence of noise trader risk.
AB - Individuals have long been blamed for noise trader risk. Moreover, the literature suggests that the discount of preferred shares against comparable common equities is due to dual-class differences in dividend yield, voting rights, management control, and turnover. In this paper, we argue and present evidence that noise trader risk, as proxied by the individual trading weight, explains the preferred stock discount observed in the Korean stock market after controlling for the conventional determinants. This main result and additional considerations empirically support the presence of noise trader risk.
KW - Individual trading weight
KW - Noise trader risk
KW - Preferred stock discount
UR - http://www.scopus.com/inward/record.url?scp=85045435030&partnerID=8YFLogxK
U2 - 10.1016/j.ememar.2018.03.006
DO - 10.1016/j.ememar.2018.03.006
M3 - Article
AN - SCOPUS:85045435030
SN - 1566-0141
VL - 38
SP - 326
EP - 346
JO - Emerging Markets Review
JF - Emerging Markets Review
ER -