THE STRUCTURE OF CLOSED-END FUND DISCOUNTS REVISITED

This study of the structure of discounts (or premiums) on the shares of closed-end investment companies finds that discounts are higher for funds with a large amount of unrealized appreciation and with significant holdings of illiquid restricted securities. Insider ownership and payout policy are found to have a very minor and statistically insignificant effect on fund pricing. The average discount for the sample in 1994 was less than 6%. The author concludes that it is hard to argue today that closed-end fund discounts are inconsistent with the existence of efficient markets.