What Can “Nine-Eleven” Tell Us about Closed-end Fund Discounts and Investor Sentiment?
Author InfoTimothy R. Burch Douglas R. Emery Michael E. Fuerst Abstract We use the horrific events of September 11, 2001 (“nine-eleven”) as a natural test of the hypothesis that closed-end mutual fund discounts from fund net asset values reflect small investor sentiment. Because nine-eleven was a sudden, unforeseen, and significantly negative and exogenous shock to the world, the capital markets, and investor sentiment, our test avoids many of the problems of extant studies. Discounts worsened dramatically following the event, and then recovered alongside the broader market. This finding is consistent with the hypothesis that discounts reflect the sentiment of small investors, who took their cues from the broader market’s overall movement. Copyright 2003 by the Eastern Finance Association. Download InfoTo download: If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links be
