Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea

Yang, Heejin; Ryu, Doowon

doi:10.3390/su13105539

Open AccessArticle

Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea

by

Heejin Yang

¹ and

Doowon Ryu

^2,*

¹

Department of Global Economics and Commerce, Dongguk University-Gyeongju, Gyeongju-si 38066, Korea

²

College of General Education, Kookmin University, Seoul 02707, Korea

^*

Author to whom correspondence should be addressed.

Sustainability 2021, 13(10), 5539; https://doi.org/10.3390/su13105539

Submission received: 19 April 2021 / Revised: 11 May 2021 / Accepted: 11 May 2021 / Published: 15 May 2021

(This article belongs to the Special Issue The 4th Industrial Revolution, Financial Markets and Economic Development)

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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: investor sentiment; dual-class share; preferred stock; price discrepancies; emerging market

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MDPI and ACS Style

Yang, H.; Ryu, D. Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea. Sustainability 2021, 13, 5539. https://doi.org/10.3390/su13105539

AMA Style

Yang H, Ryu D. Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea. Sustainability. 2021; 13(10):5539. https://doi.org/10.3390/su13105539

Chicago/Turabian Style

Yang, Heejin, and Doowon Ryu. 2021. "Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea" Sustainability 13, no. 10: 5539. https://doi.org/10.3390/su13105539

APA Style

Yang, H., & Ryu, D. (2021). Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea. Sustainability, 13(10), 5539. https://doi.org/10.3390/su13105539

Note that from the first issue of 2016, this journal uses article numbers instead of page numbers. See further details here.

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Investor Sentiment and Price Discrepancies between Common and Preferred Stocks in Korea

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