Short-Sale Constraints, Differences of Opinion, and Overvaluation

Journal of Financial and Quantitative Analysis - Tập 41 Số 2 - Trang 455-487 - 2006
Rodney D Boehme, Bartley R. Danielsen, Sorin M. Sorescu

Tóm tắt

Abstract

Miller (1977) hypothesizes that dispersion of investor opinion in the presence of short-sale constraints leads to stock price overvaluation. However, previous empirical tests of Miller's hypothesis examine the valuation effects of only one of these two necessary conditions. We examine the valuation effects of the interaction between differences of opinion and shortsale constraints. We find robust evidence of significant overvaluation for stocks that are subject to both conditions simultaneously. Stocks are not systematically overvalued when either one of these two conditions is not met.

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