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Publication year
Reputation Effects in Trading on the New York Stock Exchange
Resource type
Authors/contributors
- Battalio, Robert (Author)
- Ellul, Andrew (Author)
- Jennings, Robert (Author)
Title
Reputation Effects in Trading on the New York Stock Exchange
Abstract
Theory suggests that reputations allow nonanonymous markets to attenuate adverse selection in trading. We identify instances in which New York Stock Exchange (NYSE) stocks experience trading floor relocations. Although specialists follow the stocks to their new locations, most brokers do not. We find a discernable increase in liquidity costs around a stock's relocation that is larger for stocks with higher adverse selection and greater broker turnover. We also find that floor brokers relocating with the stock obtain lower trading costs than brokers not moving and brokers beginning trading post‐move. Our results suggest that reputation plays an important role in the NYSE's liquidity provision process.
Publication
The Journal of Finance
Volume
62
Issue
3
Pages
1243-1271
Date
2007
Citation
Battalio, R., Ellul, A., & Jennings, R. (2007). Reputation Effects in Trading on the New York Stock Exchange. The Journal of Finance, 62, 1243–1271.
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