Equity characteristics and investor preferences; empirical evidence from Finland and Sweden

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi
dc.contributor.author Kantola, Ville
dc.date.accessioned 2011-11-14T11:23:30Z
dc.date.available 2011-11-14T11:23:30Z
dc.date.issued 2010
dc.identifier.uri https://aaltodoc.aalto.fi/handle/123456789/433
dc.description.abstract The goal of the thesis is to test whether retail investors show preference towards certain type of companies. I compare the similarities between domestic and foreign equity holdings. I add to previous research by analysing also equity mutual funds and testing whether some preferences are seen also there. I use data from a Swedish brokerage company. The data contains the domestic and foreign shareholdings of Finnish retail investors and the foreign shareholdings of Swedish investors. In addition, I was able to get data of the equity mutual fund holdings of these two countries. I combine this unique data set with variables taken form Thomson Financial concerning the individual firms and data collected of the mutual fund equities. I follow the same methodology as earlier research in running regressions on the explanatory variables and classifying the stocks into portfolios. As explanatory variables I test such measures as firm size, leverage, volatility, price-to-book ratio etc. Retail investors show a preference towards smaller sized companies both in the domestic as well as in the foreign shareholdings. Similar type of preference can be noticed also among mutual fund holdings. There the relation is however not linear with respect to equities size and also other variables influence the results, especially the size of fund assets under management. The results are based on using the ownership share in a firm or a fund as the dependent variable, in line with previous research. An earlier study has offered as an explanation the fact that institutional investors show a preference towards large sized companies. My results of mutual fund holdings however do not confirm this as the only reason. Retail investors show a preference towards value stocks in domestic shareholdings, whereas based on the foreign shareholdings the preference was more towards growth stocks. None of the other variables except size seemed to perform consistently well in explaining the observed shareholdings. The second best performing variable was the amount of liquid assets with respect to company market value. One possible reason for this might be that investors invest in companies which have or have had high profitability. en
dc.format.extent 68
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.title Equity characteristics and investor preferences; empirical evidence from Finland and Sweden en
dc.type G2 Pro gradu, diplomityö fi
dc.contributor.school Kauppakorkeakoulu fi
dc.contributor.school School of Economics en
dc.contributor.department Department of Accounting and Finance en
dc.contributor.department Laskentatoimen ja rahoituksen laitos fi
dc.subject.keyword retail investor
dc.subject.keyword preferences
dc.subject.keyword firm characteristics
dc.subject.keyword home bias
dc.subject.keyword small sized stocks
dc.identifier.urn URN:NBN:fi:aalto-201111181345
dc.type.dcmitype text en
dc.programme.major Finance en
dc.programme.major Rahoitus fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Pro gradu tutkielma fi
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon sijoitukset
dc.subject.helecon investments
dc.subject.helecon sijoittajat
dc.subject.helecon investors
dc.subject.helecon pörssiyhtiöt
dc.subject.helecon exchange-listed companies
dc.subject.helecon osakkeet
dc.subject.helecon shares
dc.subject.helecon arviointi
dc.subject.helecon evaluation
dc.subject.helecon behavioral finance
dc.subject.helecon behavioral finance
dc.ethesisid 12301
dc.date.dateaccepted 2010-06-16
dc.location P1 I

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