Abstract: Individual investors who hold common stocks directly pay a tremendous performance penalty for active trading. Of 66,465 households with accounts at a large discount broker during 1991 to 1996, those that traded most earned an annual return of 11.4 percent, while the market returned 17.9 percent. The average household earned an annual return of 16.4 percent, tilted its common stock investment toward high-beta, small, value stocks, and turned over 75 percent of its portfolio annually. Overconfidence can explain high trading levels and the resulting poor performance of individual investors. Our central message is that trading is hazardous to your wealth.

Abstract: In this paper, we compare the characteristics of real world financial contracts to their counterparts in financial contracting theory. We do so by conducting a detailed study of actual contracts between venture capitalists (VCs) and entrepreneurs. We consider VCs to be the real world entities who most closely approximate the investors of theory. (1) The distinguishing characteristic of VC financings is that they allow VCs to separately allocate cash flow rights, voting rights, board rights, liquidation rights, and other control rights. We explicitly measure and report the allocation of these rights. (2) While convertible securities are used most frequently, VCs also implement a similar allocation of rights using combinations of multiple classes of common stock and straight preferred stock. (3) Cash flow rights, voting rights, control rights, and future financings are frequently contingent on observable measures of financial and non-financial performance. (4) If the company performs poorly, the VCs obtain full control. As company performance improves, the entrepreneur retains / obtains more control rights. If the company performs very well, the VCs retain their cash flow rights, but relinquish most of their control and liquidation rights. The entrepreneur's cash flow rights also increase with firm performance. (5) It is common for VCs to include non-compete and vesting provisions aimed at mitigating the potential hold-up problem between the entrepreneur and the investor. We interpret our results in relation to existing financial contracting theories. The contracts we observe are most consistent with the theoretical work of Aghion and Bolton (1992) and Dewatripont and Tirole (1994). They also are consistent with screening theories.

Abstract: We compare the characteristics of real world financial contracts to their counterparts in financial contracting theory, by studying actual contracts between venture capitalists (VCs) and entrepreneurs. (1) The distinguishing characteristic of VC financing is that they allow VCs to separately allocate cash flow rights, voting rights, board rights, liquidation rights, and other control rights. We explicitly measure and report the allocation of these rights. (2) While convertible securities are used most frequently, VCs also implement a similar allocation of rights using combinations of multiple classes of common stock and straight preferred stock. (3) Cash flow rights, voting rights, control rights, and future financing are frequently contingent on observable measures of financial and non-financial performance. (4) If the company performs poorly, the VCs obtain full control. As performance improves, the entrepreneur retains more control rights. If the company performs very well, the VCs retain their cash flow rights, but relinquish most of their control and liquidation rights.(5) It is common for VCs to include non-compete and vesting provisions, mitigating the potential hold-up problem between the entrepreneur and the investor. The contracts seem most consistent with the theoretical work of Aghion and Bolton (1992) and Dewatripont and Tirole (1994).

Abstract: This paper explores the link between changes in the aggregate value of corporate stock and changes in consumer spending. It presents data on the distribution of corporate stock ownership based on the 1998 Survey of Consumer Finances. It also uses time-series evidence on the comovement of stock market wealth and various categories of consumer spending to calibrate "the wealth effect." It concludes that in the year after a change in stock market values, consumer spending is likely to rise by between one and two cents for each dollar increase in the value of corporate stock.

Abstract: We investigate the impact of stock-based compensation on managerial ownership. We find that equity compensation succeeds in increasing incentives of lowerownership managers, but higher-ownership managers negate much of its impact by selling previously owned shares. When executives exercise options to acquire stock, nearly all of the shares are sold. Our results illuminate dynamic aspects of managerial ownership arising from divergent goals of boards of directors, who use equity compensation for incentives, and managers, who respond by selling shares for diversification. The findings cast doubt on the frequent and important theoretical assumption that managers cannot hedge the risks of these awards. WE INVESTIGATE THE IMPACT OF STOCK-BASED COMPENSATION, including options and restricted stock, on the ownership of U.S. executives. Equity-based pay spread at explosive rates in the United States during the 1990s. Morgenson ~1998! reports that in 1997, the 200 largest U.S. companies had reserved more than 13 percent of their common shares for compensation awards to managers, up from less than seven percent eight years earlier. Institutional investors and shareholder activists have tolerated and even encouraged this diversion of equity to executives, believing that managerial ownership may reduce agency problems. Boards’ compensation committees routinely cite the goal of increasing managerial ownership as the rationale for equity-based pay. 1 Although boards state that they intend stock options and other awards to boost the ownership of managers, executives are not likely to have the same goal. Modern portfolio theory predicts that managers receiving additional stock in their firms should sell these shares or, equivalently, sell other shares

Abstract: The 'new issues puzzle' is that stocks of common stock issuers subsequently underperform nonissuers matched on size and book-to-market ratio. With 7000 seasoned equity and debt issues, we document that issuer underperformance reflects lower systematic risk exposure for issuing firms relative to the matches. A consistent explanation is that, as equity issuers lower leverage, their exposures to unexpected inflation and default risks decrease, thus decreasing their stocks' expected returns relative to matched firms. Equity issues also significantly increase stock liquidity (turnover), again lowering expected returns relative to nonissuers. We conclude that the 'new issue puzzle' is explained by a failure of the matched-firm technique to provide a proper control for risk. This conclusion is robust to issue characteristics and the choice of factor model framework.

Abstract: We examine a sample of firms that adopt "target ownership plans," under which managers are required to own a minimum amount of stock. We find that prior to plan adoption, such firms exhibit low managerial equity ownership and low stock price performance. Managerial equity ownership increases significantly in the two years following plan adoption. We also observe that excess accounting returns and stock returns are higher after the plan is adopted. Thus, for our sample of firms, the required increases in the level of managerial equity ownership result in improvements in firm performance.

Abstract: Real estate investment trusts (REITs) have been a very active sector in the capital market over the last few years. This paper examines the pricing of seasoned equity offers by equity REITs during 1991-1996. Consistent with Parsons and Raviv's model, we find that SEOs by REITs are underpriced with respect to both the closing price on the day before and the closing price on the day of the offer. Underpricing depends on the institutional ownership of the firm's common stock. Issues by firms with higher institutional ownership are more underpriced for post-1990 REITs. Further, consistent with the notion that theories of IPO pricing apply to SEOs as well, the underpricing of SEOs is a function of the issue size and of the underwriter's reputation. Copyright American Real Estate and Urban Economics Association.

Abstract: This paper analyzes the structure of ownership and control of public Brazilian companies using data from 325 companies listed at the Sao Paulo Stock Exchange. We show a high degree of ownership concentration. The major shareholder has, on average, 41 percent of the equity capital, while the five major have 61 percent. Concentration occurs mainly with voting shares with 62 percent of the companies having one shareholder with more than 50 percent of the voting shares. Actually, the violation of the one share-one vote rule with the use of non-voting shares is very common. Only 11 percent of the companies do not have non voting shares and the companies have, on average, only 54 percent of their equity capital as voting capital. We also analyze the indirect ownership structure. Pyramiding structure is not commonly used as a way of violating the one share - one vote rule. Control is maintained through more than one tier. We also show the importance of different shareholder classes. Corporations are the main investor category in the direct ownership structure while individuals are more important when indirect control is accounted for.

Abstract: Islamic banking, based on the prohibition of interest, is well established throughout the Muslim world Attention has now turned towards applying Islamic principles in equity markets The search for alternatives to Western style markets has been given added impetus in Muslim countries by the turmoil in Asian financial markets in 1997 Common stocks are a legitimate form of instrument in Islam, but many of the practices associated with stock trading are not In this paper the instruments traded and the structure and practices of stock markets are examined from an Islamic perspective Speculation is not acceptable in Islam and measures would have to be taken to control speculative trading In addition short selling and margin trading are severely restricted The use of stock index and equity futures and options are also unlikely to be acceptable within an Islamic market Regulatory authorities in Muslim countries will therefore find a vast array of problems in attempting to structure a trading system that will be acceptable

Abstract: This study has two objectives: to estimate the impact of share issue privatisations on the growth of world capital markets (especially stock markets), and to examine the effect privatisation has had on the pattern of share ownership by individuals and institutional investors. We begin by documenting the increasing importance of capital markets, and the declining role of commercial banks, in corporate financial systems around the world. We then show that privatisation programmes have had a dramatic impact both on the development of non-U.S. stock markets and on the participation of individual and institutional investors in those markets. Our research documents the following key points: (1) the fraction of total domestic credit provided by the banking sector, as a percent of GDP, remained virtually constant (125 percent) between 1990 and 1998 for the world as a whole, as well as for most major country groupings. (2) During that same time period, stock market capitalisation as a percent of GDP increased from 52 to 82 percent for the world as a whole, and from 56 to 95 percent for high income countries. Market capitalisation is now over $39 trillion, which almost certainly exceeds world capitalisation. (3) Share trading volume (value of shares traded) increased even more dramatically, from 29.0 percent of world GDP in 1980 to 79.3 percent in 1998, when it reached $22.9 trillion. (4) The total market value of privatised firms grew from less than $50 billion in 1983 to almost $2.5 trillion in 1999-roughly 10 percent of the world's aggregate market capitalisation, and 21 percent of the non-U.S. total. (5) Privatised firms are the most valuable companies in seven of the ten largest non-U.S. stock markets, including the four largest, as well as in most developing countries. (6) Share issue privatisations (SIPs) have transformed international equity issuance and investment banking practices. The 25 largest - and 35 of the 39 largest - common stock issues in history have all been privatisations, and governments have raised over $700 billion through some 750 SIPs since 1977 - and over $1 trillion through all privatisation methods. (7) Academic research has now clearly established that, in most countries, SIP investors earn significantly positive excess (market-adjusted) returns on the shares they purchase - over both short and long term holding periods. (6) Privatisations have dramatically increased the number of shareholders in many countries. Almost two-thirds of the 54 non-U.S. firms (67 including US companies) with over 500,000 shareholders are privatised companies, and roughly a dozen SIPs have more than 1,000,000 initial shareholders. SIPs generally have a far larger number of stockholders than do capitalisation-matched private firms in the same country. (7) However, we also find that the extremely large numbers of shareholders created by many SIPs are not a stable ownership structure. For the 47 offers that initially yield over 250,000 shareholders, the total number of shareholders declines by one-third within five years.

Abstract: In applying options theory to R&D projects, it is important to separate unique and market risk. An example from the petroleum industry shows why. OVERVIEW: Cash flow models for valuing technology are increasingly out of touch with market place valuations. While investor psychology and perceptions about the future may drive the marketplace, the theory of real options can go a long way toward closing the valuation gap. More importantly, it is a quantitative method, and is responsive to changing sets of assumptions. This article focuses on the importance of separating unique and market risk in applying options theory to R&D projects, since the former impacts value negatively while the latter enhances value. It also illustrates how the hidden options in a new venture can contribute enormously to value, especially in fast-growing industries and in markets exhibiting high volatility. The extraordinary premiums being paid for technology stocks have caused observers to wonder whether traditional modes of valuation are obsolete. New companies that are losing money (and hence cannot be valued using price-earnings ratios or multiples of EBIT or (1) EBITDA), and for which there are minimal physical assets, are being valued instead at huge multiples of revenues or projected revenues. This has led to the coining of that famous phrase "irrational exuberance" and to the declaration by some business gurus that "DCF (2) is dead." Quite coincidentally, this extraordinary phenomenon is occurring at a time when business thinkers are taking a much more serious view of what are being called "real options" (3,4). Real options represent the application of options methodology to business situations (as contrasted to financial options, which apply to publicly traded securities, currencies and commodities). In a typical financial option transaction, one can purchase a call option on a common stock. One makes an initial investment to purchase the call. The option may be exercised at a pre-agreed "strike price," which involves a second, but optional investment. The stock is then delivered by the seller of the call and can be liquidated for cash. For example, one might purchase a call on a stock selling at $ 100 for $5. If the stock rises to $110, one next exercises the call paying $ 100. If the stock is liquidated, the second transaction nets $ 10 and the entire transaction $5. Real options are analogous. Their usefulness is gaining attention because they capture the value of managerial flexibility in ways that a pro forma DCF model alone cannot. Of course, good managers have always understood their options under changing circumstances, and arguably a good portion of their tactical skill was to recognize and evaluate the available options. But they did this intuitively, based on experience and knowledge of markets and technology (5). In today's world, where assets change hands rapidly and some of the decision-makers lack an intuitive knowledge of the businesses they are dealing with, financial valuation must supplement or replace intuition. In a previous article, I noted that "neglecting the options approach was one of the "Traps, Pitfalls and Snares in the Valuation of Technology" (6). Space considerations prevented going into more detail. This article is intended not only to clarify some key points regarding the treatment of risk, but more importantly to explain why options theory can go a long way toward explaining the extraordinary valuations accorded some technology investments. Analogy from the Oil Industry Real options today are being applied to the decision to explore for petroleum. Let us assume that corporate geologists have identified a promising geological structure. They have the expertise to estimate the probability of success (not having a dry hole), the probable size of a reservoir if one is discovered (related to the size of the reward), and the cost of building production facilities to exploit it. …

Abstract: We report our analysis, using account data from a large discount brokerage firm, of the common stock investment performance of 166 investment clubs from February 1991 through January 1997. The average club tilted its common stock investment toward high-beta, small-cap growth stocks and turned over 65 percent of its portfolio annually. The average club lagged the performance of a broad-based market index and the performance of individual investors. Moreover, 60 percent of the clubs underperformed the index.

Abstract: Contributors Preface William T. Ziemba 1. Security market imperfections: an overview Donald B. Keim and William T. Ziemba Part I. An Overview of Cross-Sectional Patterns in Stock Returns: 2. The cross-section of common stock returns: a review of the evidence and some new findings Gabriel Hawawini and Donald B. Keim 3. Beta and book to market: is the glass half full or half empty? S. P. Kothari and Jay Shanken 4. The psychology of over-reaction and under-reaction in world equity markets Werner F. M. DeBondt 5. A view of the current status of the size anomaly Jonathan B. Berk 6. The demise of size Elroy Dimson and Paul Marsh 7. Direct evidence of non-trading of NYSE and AMEX stocks Stephen R. Foerster and Donald B. Keim Part II. Seasonal Patterns in Stock Returns and Other Puzzles: 8. Is there still a January effect? Donald G. Booth and Donald B. Keim 9. Anticipation in the January effect in the US futures markets Chris R. Hensel and William T. Ziemba 10. How does Clinton stand up to history? US investment returns and presidential party affiliations Chris R. Hensel and William T. Ziemba 11. A long term examination of the turn-of-the-month effect in the S&P500 Chris R. Hensel, Gordon A. Sick and William T. Ziemba 12. The closed-end fund puzzle Carolina Minio-Paluello 13. Stock splits and ex-date returns for Nasdaq stocks: the effects of investor trading and bid-ask spreads Mark Grinblatt and Donald B. Keim Part III. International Evidence: 14. Canadian security market anomalies George Athanassakos and Stephen Foerster 15. Seasonal anomalies in the Italian stock market, 1973-1993 Elio Canestrelli and William T. Ziemba 16. Efficiency and anomalies in the Turkish stock market Gulnur Muradoglu 17. Efficiency and anomalies in the Finnish stock market Teppo Martikainen 18. Characteristics-based premia in emerging markets: sector-neutrality, cycles, and cross-market correlations Sandeep A. Patel 19. Anomalies in Asian emerging stock markets Seng-Kee Koh and Kie Ann Wong 20. Japanese security market regularities, 1990-1994 Luis R. Comolli and William T. Ziemba 21. Predicting returns on the Tokyo Stock Exchange Sandra L. Schwartz and William T. Ziemba 22. High stock returns before holidays: international evidence and additional tests Alonso Cervera and Donald B. Keim.

Abstract: Shareholders in many share issued privatizations (SIPs) have enjoyed substantial increases in the value of their investments. This study examines the factors that influence the long-run stock price performance of an international sample of SIPs, focusing on three-year buy and hold returns. After controlling for market-wide changes in stock prices, one finds that the relative size of the company has a negative effect on stock price performance, retained government ownership has a positive effect, the presence of a golden share has a negative effect, initial underpricing has a positive effect, and the timing of the privatization has no effect. Performance also depends on the industry and home country.

Abstract: The focus of this paper is on the problem of managerial opportunism in the corporate governance of UK quoted property companies. Agency conflicts exist between firm managers and owners because of the separation of ownership from management. Consequently, managers pursue activities that enhance their interests rather than that of the shareholders’. The empirical investigation of this paper is divided into two sections. The first part examines the ownership structure of 83 UK quoted property companies between 1989 and 1995, revealing that close to a quarter of the common shares issued by the companies are held by the managers. The gap between ownership and management appears to increase with firm size, risk and growth rate but decrease with corporate performance. In the second section, logit modeling is employed to examine 110 security issues of the companies during the study period. The evidence shows that ownership structure has an influence on the debt‐equity choice of property companies. Consistent with the findings of previous studies, the study also reveals that the capital structure choice is dictated to a large extent by company size, issue size, and condition of the security market. The empirical analysis also suggests that property companies make their financing decisions as though they have a target capital structure in mind.

Abstract: We explore whether the observed real stock return–inflation relations in the U.S. and 10 Pacific-rim countries for the sample period of 1970–1997 can be explained by the interaction between real and monetary disturbances. Ten countries exhibit a negative relation between real stock returns and inflation. Malaysia is the only country that exhibits a positive relation. For nine countries, real output disturbances drive a negative stock return–inflation relation, while monetary disturbances yield a positive relation. In addition, real shock components appear to be relatively more important than monetary shock components for these countries, and as a result the observed relation between stock returns and inflation is negative. Neither the tax hypothesis nor the monetary regime hypothesis seems to be easily compatible with the diverse experiences of the Pacific-rim countries.

Abstract: This paper examines the role of financial analysts as a marketing aid to brokerage firms. This study suggests that investors prefer to hold stocks of high-quality companies and that financial analysts help the marketing efforts of brokerage companies by focusing their analysis on such stocks. This paper uses S&P's common stock rankings as empirical proxies for firm quality and finds that stocks rated by S&P are followed by more analysts than those not rated. Furthermore, among those stocks rated by S&P, highly-rated stocks are followed by more analysts than poorly-rated stocks. This study also finds a significant increase (decrease) in analyst following when S&P upgrades (downgrades) quality rankings. Overall, empirical evidence supports the marketing hypothesis of analyst following.

Abstract: This paper examines the role of financial analysts as a marketing aid to brokerage firms. This study suggests that investors prefer to hold stocks of high-quality companies and that financial analysts help the marketing efforts of brokerage companies by focusing their analysis on such stocks. This paper uses S&P?s common stock rankings as empirical proxies for firm quality and finds that stocks rated by S&P are followed by more analysts than those not rated. Furthermore, among those stocks rated by S&P, more analysts follow highly rated stocks than poorly rated ones. This study also finds a significant increase (decrease) in analyst following when S&P upgrades (downgrades) quality rankings. Overall, empirical evidence supports the marketing hypothesis of analyst following.

Abstract: This article confirms and extends prior results regarding tilting of institutional investment in common stock toward quality. The evidence presented here suggests that, while both real estate investment trusts and institutional investors tilt their real estate holdings toward quality, the tilt is much more pronounced in the case of institutional investors. Controlling for quality, there is further evidence that institutional investors overweight locations where the share of local employment in business services, finance, insurance, and real estate, and transportation is relatively high (compared to national averages). This evidence is consistent with the hypothesis that significant sector tilting by institutional investors is induced by the constraints of the prudent man rule.

Abstract: Since real estate is common to most firms, this study examines whether there is a real estate factor in common stock returns that is not completely captured by existing asset pricing models. The three-factor model of Fama and French (1993), hereafter FF, is extended to incorporate a unique real estate factor. Using his extended-FF model, we examine the returns on 53 industry portfolios of common stocks over the 1972 through 1995 time period. The results indicate that a significant 19 percent of the industries are systematically related to the real estate factor. Most interestingly, we show that the loading of the real estate factor in common stock return is related to the loading of the book-to-market equity factor in these returns. We also construct decile portfolios of common stocks based on historical sensitivities of common stock returns to the real estate factor. The coefficients on the real estate factor vary systematically across the decile portfolios. The results of our analysis suggest that portfolio managers should manage their exposure to real estate.

Abstract: Private sector pension plans have undergone substantial change in form and structure in the United States over the last two decades. This paper explores and evaluates these changes using information on pension plan characteristics gathered by the U.S. Department of Labor (DOL) since 1980 in their periodic Employee Benefits Survey (EBS) of medium and large establishments. We also discuss how future data collection efforts could be improved to better measure key changes in the form and design of employer-sponsored pensions. Key findings are as follows: Many aspects of defined benefit plans changed over time. For example, vesting rules were loosened; plans eased access to normal retirement; and pension benefit formulas moved toward final rather than career earnings, with increased weight on straight-time pay. In addition, these plans became more integrated with social security; at the same time, the form of social security integration changed substantially. The evidence also indi6ate that defined benefit plan replacement rates fell over time and benefit caps limit years of service counted in the retirement formula. In addition, disability benefit provisions grew more stringent; and participants were increasingly permitted to take a lump sum from their defined benefit plan. Defined contribution plans also have evolved over time. Here, plan participants were granted greater access to diversified stock and bond funds, and fewer were permitted to invest in own-employer stock, common stock funds, and guaranteed insurance contracts. Participation and vesting rules appear most lenient for workers in 401(k) plans; generally employees must contribute a fraction of their pay to their plans rather than relying only on employer contributions; and employee access to pension fund assets fund assets prior to retirement is growing.

Abstract: This paper examines the design and pricing of an innovative derivative asset known as a variable purchase option (“VPO“). A VPO is a call option issued by a corporation on a stochastic number of shares of its common stock. The key feature of the security is that it is ex-ante certain to be exercised by rational investors at maturity, at which time the corporation is certain to issue a fixed dollar amount of new equity capital. A VPO therefore provides a corporation with an alternative to underwriting as a means to guarantee the success of a future equity offering.

Abstract: FOREWORD. INTRODUCTION. PROLOGUE. I. CORPORATE GOVERNANCE. A. Owner-Related Business Principles. B. Full and Fair Disclosure. C. Boards and Managers. D. The Anxieties of Plant Closings. E. An Owner-Based Approach to Corporate Charity. F. A Principled Approach to Executive Pay. II. CORPORATE FINANCE AND INVESTING. A. Mr. Market. B. Arbitrage. C. Debunking Standard Dogma. D. "Value" Investing: A Redundancy. E. Intelligent Investing. F. Cigar Butts and the International Imperative. III. ALTERNATIVES TO COMMON STOCK. A. Junk Bonds. B. Zero-Coupon Bonds. C. Preferred Stock. D. Unconventional Commitments. IV. COMMON STOCK. A. The Bane of Trading: Transaction Costs. B. Attracting the Right Sort of Investor. C. Dividend Policy and Share Repurchases. D. Stock Splits and Trading Activity. E. Shareholder Strategies. F. Berkshire's Recapitalization. V. MERGERS AND ACQUISITIONS. A. Bad Motives and High Prices. B. Sensible Share Purchases Versus Greenmail. C. Leveraged Buyouts. D. Sound Acquisition Policies. E. On Selling One's Business. F. Advantages in Acquisitions. VI. ACCOUNTING AND VALUATION. A. A Satire on Accounting Shenanigans. B. Look-Through Earnings. C. Economic Goodwill Versus Accounting Goodwill. D. Owner Earnings and the Cash Flow Fallacy. E. Intrinsic Value, Book Value, and Market Price. F. Aesop and Inefficient Bush Theory. VII. ACCOUNTING POLICY AND TAX MATTERS. A. The Purchase-Pooling Debate. B. Stock Options. C. "Restructuring" Charges. D. Segment Data and Consolidation. E. Deferred Taxes. F. Retiree Benefits. G. Distribution of the Corporate Tax Burden. H. Taxation and Investment Philosophy. EPILOGUE. AFTERWORD AND ACKNOWLEDGMENTS. INDEX. CONCEPT GLOSSARY. DISPOSITION TABLE.

Abstract: The new issue process in Tunisia is examined and evidence for underpricing and aftermarket performance of Initial Public Offerings are presented. Substantial positive abnormal returns are obtained in the short run and this finding is similar to that reported in other nations. A positive aftermarket return of 11.04% is found confirming underpricing but contrasting with all previous studies except that of Dawson. Solutions are proposed to reduce underpricing dealing with mechanisms by which companies initially offer shares of common stock to institutional and individual investors and the allocation procedures of new issues.

Abstract: Outlines the special characteristics of preferred shares in Germany, notes that ordinary shares are valued at substantially higher figures and presents a study of the pricing of both types for 58 German companies 1990‐1993. Refers to previous research to develop hypotheses on reasons for the common share premium and an explanatory model which is then applied to the data. Finds that larger premiums are associated with higher ownership concentration and lower trading but not to the proportion carrying voting rights or the cumulative preferred dividends in arrears; and that they are significantly reduced if a family or financial institution is a major shareholder. Goes on to show that where a family is the largest blockholder the premium increases with liquidity but for a financial institution, liquidity reduces the premium. Considers the underlying reasons for this and consistency with other research.

Abstract: Executive Summary. This study examines the determinants of institutional investment demand for real estate investment trust (REIT) common stock and whether institutional investment decisions are in...