We show that firms that employ the majority voting method for director election exhibit higher institutional ownership than firms that employ the plurality voting method, especially after the 2010 amendment to NYSE Rule 452. Firms that adopt majority voting in a bylaw or charter exhibit increases in institutional ownership and share price. These results are consistent with our conjecture that institutional investors favor companies with majority voting and investors react favorably to the adoption of majority voting because it reduces management monitoring costs by improving the accountability of elected board members.

In this study we examine the temporal dynamics of dealer market share and their ramification for competition and trading costs using a large sample of NASDAQ securities. Our results show that although the total market share of the top five dealers is relatively stable over time, there is significant monthly variation in the composition of the top five dealers. We show that market share turbulence among top dealers is another form of competition that narrows bid–ask spreads, especially for stocks with less competitive market structure.

This study presents an integrated investigation into the factors affecting executive ownership, the market value of the firm, and executive compensation by explicitly incorporating the simultaneity of the process determining these variables into the empirical estimation. Overall, the results of the study support the notion that a firm's market value, executive stock ownership, and executive compensation are jointly determined. Further, the findings suggest that executive stock ownership and executive compensation may serve as a type of bond by which top executives are induced to act in the best interests of shareholders. The study also finds that a firm's q ratio and an executive's job-specific experience (as well as firm size) are important determinants of executive compensation. This result is generally consistent with the view that the firm optimally establishes its managerial compensation plan in response to both its operating environment and the specific personal characteristics of its chief executive(s).

We investigate the empirical relation between corporate governance and stock market liquidity. We find that firms with better corporate governance have narrower spreads, higher market quality index, smaller price impact of trades, and lower probability of information-based trading. In addition, we show that changes in our liquidity measures are significantly related to changes in the governance index over time. These results suggest that firms may alleviate information-based trading and improve stock market liquidity by adopting corporate governance standards that mitigate informational asymmetries. Our results are remarkably robust to alternative model specifications, across exchanges, and to different measures of liquidity.

This study employs a stochastic model developed by G. Udny Yule and Herbert A. Simon as the probability mechanism underlying the consumer's choice of artistic products and predicts that artistic outputs will be concentrated among a few lucky individuals. We find that the probability distribution implied by the stochastic model provides an excellent description of the empirical data in the popular music industry, suggesting that the stochastic model may represent the process generating the superstar phenomenon. Because the stochastic model does not require differential talents among individuals, our empirical results support the notion that the superstar phenomenon could exist among individuals with equal talent.

This study finds that a strong bibliometric regularity exists in the publication pattern in the economics literature; the number of authors publishing n papers is approximately 1/n(superscript "c") of those publishing one paper. The economics literature conforms very well to the model with c = 1.84 if data are taken from a large collection of journals. When applied to individual journals, the result shows that values of c range from 2.04 to 3.11. This paper also reports the degree of author concentration among leading economics journals. Finally, this study finds that the graduates of three graduate programs account for more than half of the top 100 authors, indicates strong institutional dominance in the production of the most prolific authors.

Liquidity providers on the NYSE make faster quote adjustments towards equilibrium spreads and depths than they do on NASDAQ. Liquidity providers in both markets make faster spread and depth adjustments for stocks with more frequent trading, greater return volatility, higher prices, smaller market capitalizations, and smaller trade sizes. We find that stocks with greater information-based trading and in more competitive trading environments exhibit faster quote adjustments. The speed of quote adjustment is faster after decimalization in both markets. These results are robust and not driven by differences in stock attributes between the two markets or time periods. Overall, our results indicate that stock attributes, market structure, and tick size exert a significant impact on the speed of quote adjustment.

In this study, we argue that share price reaction to a firm's capital expenditure decisions depends critically on the market's assessment of the quality of its investment opportunities. We postulate that announcements of increases (decreases) in capital expenditures positively (negatively) affect the stock prices of firms with valuable investment opportunities. Contrarily, we predict that announcements of increases (decreases) in capital spending negatively (positively) affect the share prices of firms without such opportunities. Our empirical results are generally consistent with these predictions. Overall, empirical evidence supports our conjecture that it is the quality of the firm's investment opportunities rather than its industry affiliation which determines the share price reaction to its capital expenditure decisions.

Using limit order books across all US exchanges, we show that while liquidity for small orders (e.g., the quoted and effective spreads) decreases, liquidity for large orders (e.g., the cumulative depth and the price impact of multiple trades) improves after the implementation of the Tick Size Pilot Program. We find significant spillover effects on liquidity for small and large orders that extend beyond the top of the book. Finally, we show that the pilot program results in an improvement in pricing efficiency, an increase in trade size, and a decrease in the number of trades.

This study finds a bibliometric regularity in the finance literature that the number of authors publishing n papers is about of those publishing one paper. We find that the finance literature conforms very well to the inverse square law if data are taken from a large collection of journals. When applied to individual finance journals, we find that values of c range from 1.95 to 3.26. We also find that top‐rated journals have higher concentrations among their contributors. This implies that the phenomenon “success breeds success” is more common in higher quality publications.