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.
| Original language | English |
|---|---|
| Pages (from-to) | 1169-1184 |
| Number of pages | 16 |
| Journal | Journal of Finance |
| Volume | 54 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 1999 Jun |
| Externally published | Yes |
ASJC Scopus subject areas
- Accounting
- Finance
- Economics and Econometrics