Journal of Financial Services Research

, Volume 43, Issue 1, pp 69–98 | Cite as

Canadian Investors and the Discount on Closed-End Funds

  • Mohamed A. AyadiEmail author
  • Hatem Ben-Ameur
  • Skander Lazrak
  • Yue Wang


We explore the role of the discount on closed-end funds (CEFD) in asset pricing and test its validity as a proxy for investor sentiment in the Canadian stock market. Results show that CEFD is not a priced factor. Both cross-sectional and time-series tests confirm that stocks with different exposures to CEFD do not have significantly different average returns. CEFD does not even provide incremental explanatory power after controlling for firm characteristics and risk factors. Furthermore, CEFD fails to be a proxy for investor sentiment with no correlation to either the consumer confidence index or flows to open-ended funds.


Closed-end funds Investor sentiment Cross-sectional regressions 

JEL classification

G11 G12 G15 


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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • Mohamed A. Ayadi
    • 1
    • 2
    Email author
  • Hatem Ben-Ameur
    • 3
  • Skander Lazrak
    • 1
  • Yue Wang
    • 4
  1. 1.Department of Finance, Operations, and Information Systems, Faculty of BusinessBrock UniversitySt. CatharinesCanada
  2. 2.Department of FinanceKing Abdulaziz UniversityJeddahSaudi Arabia
  3. 3.Department of Management SciencesHEC MontrealMontrealCanada
  4. 4.State University of New York at BuffaloBuffaloUSA

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