Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea
Open Access
- 15 May 2021
- journal article
- research article
- Published by MDPI AG in Sustainability
- Vol. 13 (10), 5539
- https://doi.org/10.3390/su13105539
Abstract
We examine whether investor sentiment affects price discrepancies between preferred and common stocks, based on a sample of Korean firms that issue preferred stocks. While most research has focused on corporate finance features such as voting rights, we examine price discrepancies as a behavioral finance feature from a new perspective. Based on the investor sentiment index, as investor sentiment increases, price discrepancies between preferred and common stocks widen in the KOSPI market. These findings confirm that investor sentiment—not merely voting premiums, cash flow rights, and liquidity—is a significant factor in explaining price discrepancies between preferred and common stocks in Korea.Keywords
Funding Information
- Korea Exchange (2020)
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