Small-cap effect (also referred to in German)

The fact, empirically proven but so far not satisfactorily explained by financial market theory, that the shares of smaller companies perform better in the long term than those of large companies. There is no lack of explanations (part of the small cap effect is often explained by the fact that these firms are riskier and, therefore, have higher returns. In addition, small firms have lower stock prices and, thus, what would be a small price appreciation for a large firm can, in fact, be huge for a small firm. Some analysts attribute the small-firm effect to the fact that small firms have more opportunities to grow than large firms do). The extent to which these reasons apply is disputed. – See Behavioural Finance, Financial Psychology, Gibrat Rule, Halloween Rule, January Effect, Monday Effect, Sell-in-May Effect, Christmas Boost.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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