When a Master Dies: Speculation and Asset Float / Julien Pénasse, Luc Renneboog, José A. Scheinkman.

Format:

Book

Author/Creator:

Pénasse, Julien.

Contributor:

National Bureau of Economic Research.

Renneboog, Luc.

Scheinkman, José A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26831.

NBER working paper series no. w26831

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

When a Master Dies

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

The death of an artist constitutes a negative supply shock to his future production; in finance terms, this supply shock reduces the artist's float. Intuition may thus suggest that this supply shock reduces the future auction volume of the artist. However, if collectors have fluctuating heterogeneous beliefs, since they cannot sell short, prices overweigh optimists' beliefs and have a speculative component. If collectors have limited capacity to bear risk, an increase in float may decrease subsequent turnover and prices (Hong et al. 2006). Symmetrically, a negative supply shock leads to an augmentation of prices and turnover. We find strong support for this prediction in the data on art auctions that we examine.

Notes:

Print version record

March 2020.