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| Investor Sentiment and Noise Traders:
Discount to Net Asset Value in Listed Property Companies in the U.K. Author: Richard J. Barkham and Charles W. R. Ward Start Page: 291 Abstract: There are parallels
between the operation of closed-end funds and in the United Kingdom property companies. In
both types of corporations, the market capitalization is commonly less than the net asset
value (NAV) of the assets owned by the firms. This article investigates the relationship
between the NAV of U.K. property companies and their market capitalizations. We first
examine the hypothesis that discounts are the result of agency costs, contingent capital
gains tax liability and a number of other firm specific factors. We then examine the
hypothesis that discounts result from the interaction of noise traders and rational
investors. The evidence suggests that both hypotheses have utility in explaining property
company discounts. |
