When a master dies: Speculation and asset float

J.N.G. Penasse, Luc Renneboog, Jose Scheinkman

Research output: Contribution to journalArticleScientificpeer-review


The death of an artist constitutes a negative supply shock to his future produc- tion; 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 sub- sequent 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.
Original languageEnglish
JournalThe Review of Financial Studies
Publication statusE-pub ahead of print - Jan 2021


  • alternative investment
  • auction
  • art auction
  • short selling constraints
  • trading volume
  • resell option
  • pricing models
  • economics of art
  • artist death
  • premature deceas

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