# Long-term shareholder perks and stock price reaction

## TL;DR

This study shows that long-term shareholder perks in Japan can boost stock prices by expanding the shareholder base, but may reduce liquidity if the perks are poorly received.

## Contribution

The study introduces a novel categorization of shareholder perk announcements into favorable and unfavorable changes for more precise stock price analysis.

## Key findings

- Favorable long-term shareholder perks increase stock prices by expanding the shareholder base.
- Unfavorable perks lead to a weak trend of shareholder base shrinkage and reduced stock liquidity.
- Perks in favorable cases encourage shareholders to hold shares for longer periods.

## Abstract

This study aimed to examine the impact and source of announcements introducing additional long-term shareholder perks on stock prices of Japanese listed companies. We produced more precise analysis results by categorizing the total sample into favorable change and unfavorable change sample. As a result, we found that long-term shareholder perks have a positive impact on stock prices through the expansion of the shareholder base in the case of a favorable change, whereas there is no negative impact on stock liquidity due to an increased number of long term individual shareholders. On the contrary, in the case of an unfavorable change, we found a weak trend of shrinkage in the shareholder base due to individual shareholders’ defection and a consequent decrease in stock liquidity. In the case of a favorable change, the long-term shareholder perks program functions as a means to increase the number of shareholders and encourage them to hold the shares for a longer period of time.