Abstract
This study explored the characteristics of Indian stocks when categorized on the basis of nominal prices. Special focus is on the Penny Stocks which are the least price category. We find that penny stocks in India are categorized by higher raw returns, very low share of market capitalization and turnover and bad corporate governance. However, when adjusted for extreme returns, penny stocks generate less return compared to high denomination stocks. Penny stock returns are well explained by the standard empirical asset pricing models. However, when adjusted for corporate governance, they exhibit extra abnormal returns. The higher denomination priced stocks in India outperform the market across all the models.
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