Ra. Booth, THE EFFICIENT MARKET, PORTFOLIO THEORY, AND THE DOWNWARD SLOPING DEMAND HYPOTHESIS, New York University law review, 68(5), 1993, pp. 1187-1212
Traditional theory holds that the price of a stock is not affected by
changes in the stock's supply. Professor Booth argues that demand for
individual stocks is ''downward sloping,'' and that changes in supply
do affect stock price. After demonstrating that downward sloping deman
d does not conflict with the efficient market theory or modern portfol
io theory, he goes on to explore the impact of downward sloping demand
on the laws and policies governing public offerings, stock repurchase
s, tender offers, management buyouts and ''going private'' transaction
s, and the appraisal remedy.