Institutional Investors and Equity Prices
Abstract
This paper analyzes institutional investors' demand for stock characteristics and the implications of this demand for stock prices and returns. We find that "large" institutional investors nearly doubled their share of the stock market from 1980 to 1996. Overall, this compositional shift tends to increase demand for the stock of large companies and decrease demand for the stock of small companies. The compositional shift can, by itself, account for a nearly 50 percent increase in the price of large-company stock relative to small-company stock and can explain part of the disappearance of the historical small-company stock premium.
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Large institutions prefer value stocks.
“Gompers and Metrick (1998) document that large institutions prefer value stocks”
From Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors (2000) · cites this paper as Gompers and Metrick (1998)
Cites
Preferences for Stock Characteristics As Revealed by Mutual Fund Portfolio Holdings
FALKENSTEIN, E. G. (1996) · The Journal of Finance · doi:10.1111/j.1540-6261.1996.tb05204.x · Cited by 1,058 · see citing works
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Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors
Barber, B. M., & Odean, T. (2000) · The Journal of Finance · doi:10.1111/0022-1082.00226 · Cited by 3,955 · see citing works
- Authors
- Gompers, P. A., & Metrick, A.
- Publisher
- Elsevier BV
- Published
- 1998
- Cited by
- 24
- References
- 1
- Type
- Preprint
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