Do investors value shareholder perks? Evidence from Japan

By focusing on the price and trading volume movements around the ex-days of shareholder perks, we investigate whether and how investors value shareholder perks. Using comprehensive shareholder perks data from Japan, we demonstrate a significant price decline for stocks with shareholder perks around exdays, as an evidence that shareholder perks are valuable for investors. We also show that heterogeneous preference for shareholder perks among investors leads to active trading around the ex-day. A price drop larger than the estimated cost of shareholder perks implies that gift giving is welfare increasing, providing a new insight into the long-standing debate on whether gift giving creates welfare gain or loss. This study also provides empirical findings that are consistent with behavioral model of mental accounting, which posits that receiving a gift-in-kind rather than cash or gift cards is utility increasing for consumers. (c) 2022 Elsevier B.V. All rights reserved.