New Research on Use, Misuse of Stock Price in the Market at Upcoming IRRCi, Millstein Center Event
New Research on Use, Misuse of Stock Price in the Market at Upcoming IRRCi, Millstein Center Event
New York, September 17, 2014—The IRRC Institute and the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School will present brand-new research focusing on “The Purpose, Use, and Potential Misuse of Stock Price in the Public Equity Market” on September 19, 2014 at Columbia Law School in New York City.
The day-long conference will feature presentations of four innovative research papers, exploring various facets of the effect of stock price on the decision-making of corporate management, boards of directors, and investors.
“Given managers’ and investors’ potential reliance on market price as a sentiment indicator and guidestar for decision-making, having a better understanding on how accurately short-term price reflects corporate value is a critical, and under-examined, area for research,” said Robert J. Jackson, Jr. Faculty Co-Director of the Millstein Center. “The Millstein Center is very pleased to support this critical research, and we are very much looking forward to hearing and debating the authors’ findings.”
The papers will specifically explore (1) the relationship between existing stock price and company acquisition, change management, and value (2) the existence and effects of predatory short selling in financial markets; (3) the impact of information accessibility and stock price knowledge on managerial investment and overall decision-making and (4) the short-term nature of stock price for equities valuation and its inadequacy as a stand-alone tool for investors concerned with the integration of ESG issues into long-term strategic decision-making.
"Price is bowed down to by adherents to strict market theory as the sum of all available information. And it's damned by others as a short-term indicator buffeted by ever changing market conditions. But price itself is too rarely the focus of serious research,” Jon Lukomnik, Executive Director of the IRRC Institute, said. “This research starts to correct that oversight, not by assuming price is correct or incorrect, but by understanding its utility and limitations in the real world."
The papers and authors, selected from a 2013 joint IRRCi and Millstein Center Call for Proposals, are:
- “Market Efficiency and the Development of the Market for Corporate Control” by Brian Cheffins (Cambridge) and John Armour (Oxford)
- “Market Predators” by Lauren H. Cohen (Harvard), Karl Diether (Brigham Young), Dong Lou (London School of Economics) and Christopher Malloy (Harvard)
- "Managerial Learning from Stock Prices: A Structural Examination" by Itay Goldstein (UPenn) and Andrew Di Wu (UPenn)
- “The Potential Use of Sustainability Scenarios as a Supplement to Stock Price in Equity Valuation by Long-term Investors” by Steve Lydenberg (Domini Social Investments; Initiative for Responsible Investment, Harvard)
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About the IRRC Institute
The Investor Responsibility Research Center Institute's (IRRCi) wide body of research reports empowers investors, policymakers, and other stakeholders to make better, data driven decisions. For more on IRRCi, please visit http://www.irrcinstitute.org/.
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About the Millstein Center
The mission of the Millstein Center for Global Markets and Corporate Ownership at Columbia Law School is to bring world class scholarship, research and academic rigor to the vital task of restoring and strengthening long-term financing of innovative and durable public corporations, which are the underpinning of economic growth. For more information on the Center's work, please visit http://web.law.columbia.edu/millsteincenter.