This paper investigates the once and future role of listing fees. We consider the theory of listing fees and why such a pricing structure initially evolved. We show how capital market developments have changed the desirability, and even viability, of this pricing structure. We then analyze the economics of listing fees. While providing revenue to the exchange, listing fees impose large (opportunity) costs, and we analyze this trade-off, presenting evidence from the New York Stock Exchange. We also discuss what types of listing requirements make economics sense for exchanges (or perhaps regulators) to impose on companies. Finally we consider whether listing fees will continue to survive. Journal of Economic Literature Classification Numbers: G10, G18, K22, K23.

Recent studies suggest the apparent delay in the stock‐price response to earnings announcements (i.e., post‐earnings announcement drift) is caused by investors who underestimate the autocorrelation of seasonally‐differenced earnings (persistence). I present results that suggest: (1) a firm’s future persistence is predictable on the basis of its past persistence; (2) the immediate stock‐price response to earnings is positively related to historical persistence; (3) post‐earnings‐announcement drift is independent of historical persistence; and (4) consistent with (2) and (3), the difference between a firm’s current observed persistence and that implied in stock prices is independent of its historical persistence. These results extend prior research by demonstrating that investors are aware not only that seasonally‐differenced earnings are autocorrelated, but that investors recognize firm‐specific differences in the magnitude of the autocorrelation.

Under the standard real options approach to investment under uncertainty, agents formulate optimal exercise strategies in isolation and ignore competitive interactions. However, in many real-world asset markets, exercise strategies cannot be determined separately, but must be formed as part of a strategic equilibrium. This article provides a tractable approach for deriving equilibrium investment strategies in a continuous-time Cournot–Nash framework. The impact of competition on exercise strategies is dramatic. For example, while standard real options models emphasize that a valuable “option to wait ” leads firms to invest only at large positive net present values, the impact of competition drastically erodes the value of the option to wait and leads to investment at very near the zero net present value threshold. The real options approach to analyzing investment under uncertainty has become part of the mainstream literature of financial economics. The real options approach to investment now typically comprises an entire chapter in corporate finance textbooks [see, e.g., Brealey and Myers (2000) and Van Horne (1998)]. Essentially the real options approach posits that the oppor-tunity to invest in a project is analogous to an American call option on the investment opportunity. Once that analogy is made, the vast and rigorous machinery of financial options theory is at the disposal of real investment analysis. The real options approach is well summarized in Dixit and Pindyck (1994) and Trigeorgis (1996).1 A feature that the vast majority of real options articles have in common is the lack of strategic interaction across option holders. Investment (exercise) strategies are formulated in isolation, without regard to the potential impact of other firms ’ exercise strategies. The standard starting point for such models is an exogenous process for underlying asset values (e.g., the stock price in

In most models of market microstructure tractability requires that all market participants know the number (and presence) of competing insiders. I drop this assumption in experimental asset markets. Outcomes are qualitatively consistent with theoretical models when the number of insiders is disclosed prior to trade. When it is not, insiders use the timing and size of trades interactively to hide from the dealers and each other, dealers have difficulty identifying insider trades, and liquidity patterns do not differ as a function of the number of insiders. In general, insider behavior has strategic dimensions not admitted in Kyle (1985) and extensions.