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Brand Perceptions and the Market for Common Stock

Published online by Cambridge University Press:  06 April 2009

Laura Frieder  and
Avanidhar Subrahmanyam
Laura Frieder
Affiliation:
llfriede@mgmt.purdue.edu, Krannert School of Management, Purdue University, West Lafayette, IN 47907
Avanidhar Subrahmanyam
Affiliation:
subra@anderson.ucla.edu, The Anderson School, University of California at Los Angeles, 110 Westwood Plaza, Los Angeles, CA 90095.
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Abstract

This paper investigates the effect of company brand perceptions on investor propensities to hold stocks. We find that, after controlling for other determinants of stockholdings, there is a negative and significant cross-sectional relation between institutional holdings and brand visibility, which is consistent with the notion that individual investors prefer to invest in stocks with easily recognized products. Furthermore, we find that institutional holdings are positively related to firm size and beta. Our analysis supports the notion that institutional portfolios eschew relatively neglected small firms, whereas individuals prefer holding stocks with high recognition and, consequently, greater information precision.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 40 , Issue 1 , March 2005 , pp. 57 - 85
Copyright
Copyright © School of Business Administration, University of Washington 2005

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