Number of Shareholders and Stock Prices: Evidence from Japan |
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| Authors: | Yakov Amihud,Haim Mendelson,& Jun Uno |
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| Affiliation: | Stern School of Business, New York University and at the Faculty of Management, Tel Aviv University,;Graduate School of Business, Stanford University,;NIKKEI QUICK Information Technology Co. Ltd., Tokyo, Japan |
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| Abstract: | 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. |
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