Also found in: Wikipedia.
First, a public company may create a stock that strips out the market wide movements for the purpose of rewarding managers. That is, the management might have done a great job - but the traded stock plummets because the market as a whole plummets. A second interpretation of shadow stock is a phantom stock that is created by a private company (i.e. that does not have stock traded either on exchange or over the counter) again for the purpose of performance evaluation and rewards.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A term used to describe the stock of a publicly-traded company that has already been listed on an exchange after the listing of a new company in the same or a similar industry. For example, stock in an already established oil company is a shadow stock to that of a newly listed oil company. When a new company is listed on an exchange, its share price tends to increase rapidly. This often causes shadow stocks to increase as well. However, the increase in the shadow stock's price is not sustainable, as it is unrelated to its actual performance, and it tends to drop soon after.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved