부산대학교 도서관

The article explores the correlation between the closed-end fund discount and the market prices of other stocks predominantly held by small non-institutional investors. These investors are the predominant holders of small capitalization stocks and closed-end funds and also make up a sizable proportion of the market for initial public offerings. Since the capitalization of closed-end funds is relatively small, it is difficult for institutional speculators controlling large pools of capital to trade heavily in closed-end funds and thereby to push their price back to fundamentals. Shifts in the closed-end fund discount were associated with shifts in the market's valuation of stocks in general. Because small investors dominated the market, an index of their sentiment was also an index of market sentiment. In the future the discounts on various types of closed-end funds may continue to serve as good indicators of small investor sentiment but there will be no other securities for which small investor sentiment is an important pricing factor.