Next Seminar:
Prof. Allaudeen Hameed: Nominal Price Preferences, Investor Welfare and Market Quality 

2026-04-20, Monday, 11:40-12:40 (Budapest time) 

Institute of Finance - Room E.279.1. (Corvinus main building E, second floor) 

Abstract: We show that a behavioral preference for low-priced stocks is individually costly but collectively beneficial: retail investors lose money by overweighting low-priced stocks, yet their presence sustains liquidity, price efficiency, and valuations for all market participants. We establish this using the Singapore Exchange’s Minimum Trading Price rule, which generated staggered, regulation-induced reverse splits that mechanically lifted nominal prices, combined with proprietary account-level trades that trace causal effects on investor behavior and market outcomes. When a held stock is pushed out of the low-price tier, retail investors cut trading by 70–77% and substitute into other low-priced stocks, preserving the price label rather than the underlying return distribution. Within-investor buy-minus-sell portfolios show that low-price trades underperform the same investor’s high-price trades by 2.8% per annum, particularly after the shock leads to reallocation into substitute low-priced stocks. The unchanged volatility and skewness of treated stocks confirm that investors react to salient prices rather than changes in lottery characteristics. At the stock level, expelling the low-price retail clientele produces the mirror image: liquidity deteriorates sharply, price discovery slows, short-term reversals weaken, return co-movement re-sorts across price tiers, and valuations fall by 5%, with no concurrent change in fundamentals. A regulation designed to protect retail investors thus simultaneously eliminates a source of market quality that benefited all participants, revealing a fundamental tension between investor protection and market quality in retail-dominated markets.

Joint work with Zhenghui Ni and Yuanyuan Pan 

• Read Prof. Allaudeen Hameed’s publications: https://discovery.nus.edu.sg/220-allaudeen-hameed/ 

• Consult the schedule of upcoming seminars:  https://sites.google.com/view/finance-seminars/schedule  

Please note that this Microsoft Teams link is provided only for those unable to attend the seminar in person at Corvinus University of Budapest, Institute of Finance, E.279.1. The seminar will generally be held offline. 

Read more about some researchers who have already presented at our Research Seminar