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...