Demand curves for stocks do not slope down: Evidence using an exogenous supply shock
Jain, A and Tantri, P L and Thirumalai, R S (2019) Demand curves for stocks do not slope down: Evidence using an exogenous supply shock. Journal of Banking & Finance, 104. 19 - 30.
Full text not available from this repository. (Request a copy)Abstract
We analyze the price impact of an exogenous share sale of inside blockholders who were forced to sell a part of their shareholdings following a regulatory change in India. The affected firms experience a negative excess return of 4.3 during the issue week. Crucially, the price impact reverses within around 16 days of the event. Our results are consistent with the view that long-term demand curves for stocks are flat; this view is echoed in classical finance theories. The short-term price reaction to a sale is probably due to temporary price pressure.
| Affiliation: | Indian School of Business |
|---|---|
| ISB Creiators: |
ISB Creators ORCiD Tantri, P L UNSPECIFIED Thirumalai, R S http://orcid.org/0000-0001-9251-6829 |
| Item Type: | Article |
| Uncontrolled Keywords: | Supply shock, Slow moving capital, Demand curve, Price pressure |
| Subjects: | Finance |
| Depositing User: | Ilayaraja M |
| Date Deposited: | 21 Jun 2019 19:27 |
| Last Modified: | 01 Jul 2019 17:04 |
| URI: | http://eprints.exchange.isb.edu/id/eprint/1153 |
| Publisher URL: | https://doi.org/10.1016/j.jbankfin.2019.03.012 |
| Publisher OA policy: | http://sherpa.ac.uk/romeo/issn/0378-4266/ |
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