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Rookies to the stock market: A portrait of new shareholders
Uppsala universitet.ORCID iD: 0000-0002-6418-326X
2016 (English)In: Research In International Business and Finance, ISSN 0275-5319, E-ISSN 1878-3384, Vol. 38, p. 565-576Article in journal (Refereed) Published
Abstract [en]

This study examines individuals entering the stock market, “rookies.” The study uses unique ownership data, containing investor holdings of all listed Swedish firms over the sample period from 2004 to 2010, to examine rookies’ stock portfolios. In addition, this study explores investor sophistication among rookies, based on individual characteristics and portfolio composition. Although the average shareholder is aging and leaving the stock market, this study shows there are signs of rejuvenation, with rookies entering the stock market. The results show that the majority of rookies hold under-diversified stock portfolios and choose one large firm as their first stock market investment. Rookie characteristics display gender differences, in which the average female rookie has lower income, is older, but holds a larger stock portfolio than her male counterpart.

Place, publisher, year, edition, pages
Elsevier, 2016. Vol. 38, p. 565-576
Keywords [en]
Individual investor, Finance, Stock market, Stock portfolio, Rookie, Behavioral finance, New, First-time
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hkr:diva-22362DOI: 10.1016/j.ribaf.2016.07.001ISI: 000386012800045OAI: oai:DiVA.org:hkr-22362DiVA, id: diva2:1588390
Note

Financial support from Svenska Spel and also Kungliga Vitterhetsakademien.

Available from: 2021-08-27 Created: 2021-08-27 Last updated: 2021-08-27Bibliographically approved
In thesis
1. Shareholders and cherry-picking IPOs: Studies on shareholders, initial public offerings and firm ownership structure
Open this publication in new window or tab >>Shareholders and cherry-picking IPOs: Studies on shareholders, initial public offerings and firm ownership structure
2020 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation explores investor characteristics and shareholdings of publicly traded Swedish firms. The dissertation consists of an introductory chapter, three published papers, and one working paper. All four papers use Swedish data. Two of the studies examine initial public offerings (IPOs) and the ownership structure; one explores first-time shareholders, and one examines IPOs and first-time shareholders.

Paper I studies IPOs with the focus on initial return, the allocation of the shares and inside holdings. The paper presents evidence on allocation of shares to institutional and individual investors. The paper highlights the information asymmetry between institutional and individual investors and shows a wealth transfer from old to new shareholders. The results also show that money left on the table is received primarily by institutions rather than individual investors.

Paper II explores the characteristics of first-time shareholders (rookies). I portray the rookies of the stock market and present a model to explain portfolio characteristics. The results show that despite the trend of individuals leaving the stock market, there are new individuals investing in stocks. I also show that gender balance among individual shareholders is rather even, which contradicts approximations of previous studies in other countries. The paper also raises the concern of diversifying stock portfolios, as the average portfolio holds less than four shares for all individuals and less than two for rookies. 

Paper III studies the relationship between IPOs and rookies. The paper highlights whether rookies invest in IPOs. The results show that besides bringing new firms to the stock market, IPOs contribute to that market, as they attract rookies to invest in the IPOs. The results also show that the return for rookies investing in IPOs is lower compared with rookies investing in non-IPOs.

Paper IV studies the relationship between offer price and post-IPO ownership structure. The paper uses price groups and two definitions of breadth of ownership in the analyses. The results show that firms can affect their post-IPO ownership structure through the offer price.

Place, publisher, year, edition, pages
Uppsala: Acta Universitatis Upsaliensis, 2020. p. 58
Series
Doctoral thesis / Företagsekonomiska institutionen, Uppsala universitet, ISSN ISSN 1103-8454 ; 203
Keywords
business studies, corporate finance, behavioral finance, ownership structure, shareholders, IPO, first time, rookie
National Category
Business Administration
Identifiers
urn:nbn:se:hkr:diva-22369 (URN)978-91-506-2833-3 (ISBN)
Public defence
2020-09-07, Hörsal 2, Kyrkogårdsgatan 10, Uppsala, 13:15 (English)
Opponent
Supervisors
Available from: 2021-08-27 Created: 2021-08-27 Last updated: 2021-08-27Bibliographically approved

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Citation style
  • apa
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