Stock Ownership Code (stko)
Posted: 17 April 2015 03:25 AM   [ Ignore ]
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I’m a bit confused about the Compustat item stko (Stock Ownership Code). Many research papers drop observations where stko is not 0 and argue that 0 is for publicly listed firms that are not subsidiaries to other firms. 1 and 2 are mentioned to be subsidiaries of public and private firms, respectively. I’m not sure what codes 3 and 4 exactly mean. However, all of the Compustat firm should be publicly listed firms or? Can any explain the differenences in the share ownership codes?

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Posted: 17 April 2015 06:19 AM   [ Ignore ]   [ # 1 ]
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hi,

See page 267 of the Compustat Fundamental Annual manual: http://web.utk.edu/~prdaves/Computerhelp/COMPUSTAT/Compustat_manuals/user_05r.pdf

The SEC has several rules when a firm has to publicly file their statements. One of them being that there are 500 or more shareholders. Obviously, listed firms easily meet this requirement, but also private firms with (for example) employee stock option plans can meet this requirement. I am not 100% sure, but I believe Facebook met this requirement before their IPO. So, Compustat’s sample is firms that file with the SEC, so that includes this ‘full’ sample. One way to get rid of private firm-year observations is to require a stock price (prcc_f) as private firms won’t have a stock price in Funda. It will also drop listed firms though that are on OTC/Pink sheets (these firms are not in CRSP and will have a missing stock price if they were OTC/Pink at fiscal year end).

By the way, Compustat also holds 2-3 years or so of date prior to the IPO (based on the prospectus). So, in that sense having ‘private’ firm-years is quite common.

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Joost

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Posted: 17 April 2015 08:31 AM   [ Ignore ]   [ # 2 ]
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Thx for the quick and interesting response! The requirement for private firms with more than 500 shareholders is interesting, I have to do some more reading on that. While there are not many obs. with stko 1,2 and 4, there are a lot of obs. with stko = 3 (~1/5 of the sample - and they have price data!). According to the manual, stko = 3 if a company is publicly traded but not on a major exchange. However, I couldnt find a definition of a major exchange in the manual - my guess is that NYSE, NASDAQ, and AMEX are the major exchanges - but 1/5 seems a lot of firm, and I’m wondering where they could be listed?

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Posted: 17 April 2015 09:03 AM   [ Ignore ]   [ # 3 ]
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Take a look at variable EXCHG (Stock Exchange Code) in Funda; code lookup in Exchange Trading Sys Codes Reference Data (R_EX_CODES), see https://wrds-web.wharton.upenn.edu/wrds/research/variable.cfm?library_id=129&file_id=65877

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Joost

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Posted: 19 April 2015 05:39 AM   [ Ignore ]   [ # 4 ]
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Thanks! Unfortunately information there is also not that detailed, most of these obs. are simply “Other-OTC”. I guess I will track some of the stocks to see where exactly they are listed.

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Posted: 19 April 2015 06:45 AM   [ Ignore ]   [ # 5 ]
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hi,

I would expect that such firms would not be in CRSP (and would be dropped in many studies). Curious to know the details though smile

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Joost

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