Recent research strongly suggests that CEO incentive schemes are not solely determined by the standard considerations of risk-sharing and effort. Here, we examine the effect of the microstructure of the market in which the firm's shares are traded. If informed traders are free to choose both the...

Apparently spurred by allegations of collusive pricing, dealers in the NASDAQ stocks Apple, Amgen, Cisco, and Microsoft began offering odd-eighth quotes in May 1994. Intel dealers followed shortly thereafter. If the associated dramatic reduction in quoted spreads represented a move to...

This paper investigates the market reaction to short sales on an intraday basis in a market setting where short sales are transparent immediately following execution. We find a mean reassessment of stock value following short sales of up to - 0.20 percent with adverse information impounded...

Recent theoretical models have shown that liquid stock markets can improve the alignment of managers' and shareholders' interests even though high stock turnover would seem to be incompatible with the traditional view of monitoring of management by a stable set of shareholders. We test the...

In adverse-selection models of security market microstructure, a market-maker could enhance efficieny if he were willing to sustain short-term trading losses. We show that this deniable activity, which we term quot;facilitationquot;, can be supported as a self-enforcing agreement between...