PT  - JOURNAL ARTICLE
AU  - Harsimran Sandhu
AU  - Kousik Guhathakurta
AU  - Pradip Banerjee
TI  - Do Individual Investors Prefer a Price Range in the Equity Markets?
AID  - 10.3905/jwm.2021.1.132
DP  - 2021 Mar 11
TA  - The Journal of Wealth Management
PG  - jwm.2021.1.132
4099  - https://pm-research.com/content/early/2021/03/11/jwm.2021.1.132.short
4100  - https://pm-research.com/content/early/2021/03/11/jwm.2021.1.132.full
AB  - This article focuses on a wealth-constrained individual investor preference for lower price ranges in the Indian secondary equity market, using stock-split data to gauge the effects of lower price ranges on individual ownership. The hypothesis is that individual investors operate within a price range of choice. The overall findings address three specific contributions. First, the impact of various post-split price (PSP) bands on both individual and institutional investors is assessed. Second, a specific PSP range is estimated that triggers a shift in ownership from institutional investors to individual investors. Third, the article shows the firm-specific characteristics for companies that target lower-priced stocks.TOPICS: Security analysis and valuation, fundamental equity analysis, emerging marketsKey Findings▪ The lowest bands of post split price (PSP) have maximum positive impact on ownership of individual shareholders.▪ The lowest bands of post split price have maximum negative impact on ownership of institutional shareholders.▪ The Shift in ownership from institutional investors to individual investors happens at the lowest bands of Post split price (PSP).▪ Companies having lower price-to-book ratios and higher market capitalization target lower market prices (PSP) to attract individual shareholders post split.