Determinants of Relative Investor Demand for Common Stocks

Authors

  • William M. Cready Texas A&M University

DOI:

https://doi.org/10.1016/1057-0810(95)90026-8

Abstract

This paper examines the demand for a firm’s common stock by wealthy relative to less wealthy individual investors and by individual relative to institutional investors as a function of risk, information environment (proxied by firm size and S&P 500 membership), and form of return payout (i.e., dividends versus capital gains.) The findings indicate that among individual investors demand for the stocks of riskier, larger, and low-dividend-yield firms increases with wealth. The findings also suggest that relative to individual investors, institutional investors prefer the stocks of larger firms, S&P 500 firms, and firms paying low dividend yields. Overall, these results suggest that investors find a number of firm-specific factors important in their investment choices and that the importance of such factors varies systematically with investor size. Journal of Accounting, Auditing, & Finance, Summer 1994, 9(3): 487-507. (Reprinted with permission of Journal of Accounting, Auditing, Q Finance.)

Published

1995-06-30

How to Cite

Cready , W. M. (1995). Determinants of Relative Investor Demand for Common Stocks. Financial Services Review, 4(1), 63–64. https://doi.org/10.1016/1057-0810(95)90026-8

Issue

Section

Abstracts of Articles on Individual Financial Management