I have always suspected the flows derive performance ("reflexivity") bit, but could find no formal literature to support it. I'd have to dig through my notes, but anecdotally two channels come to mind:
1) there were stories (by Jim Chanos) i believe where high stock prices flowed into "venture capital arms of the cos" investing in BUYERS of their product! Dot Con Era 1999-2001 vintage!
2) The tremendous incentive stock options put on suitably machiavellian sociopathic CEOs is another channel.
I'd be curious if you have any cases to add, where high stock price gets monetized into higher "business activity" in some causal way...?
I have always suspected the flows derive performance ("reflexivity") bit, but could find no formal literature to support it. I'd have to dig through my notes, but anecdotally two channels come to mind:
1) there were stories (by Jim Chanos) i believe where high stock prices flowed into "venture capital arms of the cos" investing in BUYERS of their product! Dot Con Era 1999-2001 vintage!
2) The tremendous incentive stock options put on suitably machiavellian sociopathic CEOs is another channel.
I'd be curious if you have any cases to add, where high stock price gets monetized into higher "business activity" in some causal way...?
cheers.