Contributing to the debate on the nominal price puzzle, we show that higher stock price level is associated with lower noise trading level which confirms Black's (1986) conjectures that noise traders prefer low-priced stocks to high-priced stocks. The result is robust after controlling for...

Why do firms manage their stock price levels? Building on the catering hypothesis and institutional investor preference literature, we propose a generalized catering hypothesis that managers cater their share price level to different types of investor (individual vs institutional) in order to...

Expectation errors, generally defined, have been used by previous studies to show why investors pay too much for growth. In contrast, our study analyses what actual mistakes investors have made and how they could have been avoided. We show that investors ignore the negative impact of growth on...