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U.K. Investment Trust Valuation and Investor Behavior, 1880–1929

Published online by Cambridge University Press:  28 September 2022

Dimitris P. Sotiropoulos Open the ORCID record for Dimitris P. Sotiropoulos [Opens in a new window] ,
Janette Rutterford  and
Daniele Tori Open the ORCID record for Daniele Tori [Opens in a new window]
Dimitris P. Sotiropoulos*
Affiliation:
Associate Dean for Research, Enterprise, and Scholarship, Faculty of Business and Law, The Open University, UK, Walton Hall, Milton Keynes, MK7 6AA, UK.
Janette Rutterford
Affiliation:
Professor Emerita, Department of Accounting and Finance, The Open University Business School, UK, Walton Hall, Milton Keynes, MK7 6AA, UK. E-mail: j.rutterford@open.ac.uk.
Daniele Tori
Affiliation:
Lecturer, Department of Accounting and Finance, The Open University Business School, UK, Walton Hall, Milton Keynes, MK7 6AA, UK. E-mail: daniele.tori@open.ac.uk.
*
E-mail: dimitris.sotiropoulos@open.ac.uk
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Abstract

This study looks at the valuation of U.K. investment trusts for the 50 years following their appearance as companies in the 1880s. Based on a large and unique dataset compiled from primary sources, our calculations reveal a huge variation between the ordinary share prices of investment trusts and their underlying net asset “fundamental” values. This mismatch is a well-known puzzle in modern financial markets and has attracted a large volume of research because it casts doubt on the concept of market efficiency. We investigate possible explanations for this pricing puzzle and shed light on U.K. investor behavior before the 1930s.

Type
Article
Information
The Journal of Economic History , Volume 82 , Issue 4 , December 2022 , pp. 1031 - 1069
Copyright
© The Author(s), 2022. Published by Cambridge University Press on behalf of the Economic History Association

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Footnotes

We would like to thank Dan Bogart and the two anonymous referees for their suggestions and comments. The responsibility for any remaining errors or omissions is, of course, ours alone.

References

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