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Economic Consequences of Section Transfers in Japan: Change in Investor Base

Journal of Finance and Investment Analysis, 2021-01, Vol.10 (2)

2021. This work is published under http://creativecommons.org/licenses/by/2.5/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 2241-0988 ;EISSN: 2241-0996

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  • Title:
    Economic Consequences of Section Transfers in Japan: Change in Investor Base
  • Author: Abo Rodrigue Majoie
  • Subjects: Investments
  • Is Part Of: Journal of Finance and Investment Analysis, 2021-01, Vol.10 (2)
  • Description: Transfer of stocks to a more regulated section within the same stock exchange is a quasi-natural experiment that enhances the investor base of companies. The purpose of this paper is to examine for the first time this investor base change and its price-impact. Considering the Japanese Exchange Group merger in 2012 and its structural amendments, the author uses a final sample of 181 firms between 2014-2019. An event study methodology is used to examine the abnormal returns and trading activity in relation to the investor base change proxy. The study also uses robust MM regression analysis to investigate whether the expected price-impact has is temporary or permanent. The results demonstrate that companies that had the largest positive shift in investor base also experienced the largest positive abnormal returns (+ 3.74%) and volume gains. Crucially, the author found no evidence of reversal of this price-impact, inconsistent with the price-pressure hypothesis. Instead, the increase in stock prices caused by section transfer to a more regulated section seems to be permanent.
  • Publisher: Christchurch: Scientific Press International Limited
  • Language: English
  • Identifier: ISSN: 2241-0988
    EISSN: 2241-0996
  • Source: Alma/SFX Local Collection
    ProQuest Central
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