Arbeitspapier
Why Do Firms Pay for Liquidity Provision in Limit Order Markets?
In recent years, a number of electronic limit order markets have reintroduced market makers for some securities (Designated Market Makers). This trend has mainly been initiated by financial intermediaries and listed firms themselves, without any regulatory pressure. In this paper we ask why firms are willing to pay to improve the secondary market liquidity of their shares. We show that a contributing factor in this decision is the likelihood that the firm will interact with the capital markets in the near future, either because they have capital needs, or that they are planning to repurchase shares. We also find some evidence of agency costs associated with the initiation of a market maker agreement as the probability of observing insider trades increases when liquidity improves.
- Sprache
-
Englisch
- ISBN
-
978-82-7553-562-5
- Erschienen in
-
Series: Working Paper ; No. 2010/12
- Klassifikation
-
Wirtschaft
General Financial Markets: General (includes Measurement and Data)
Financial Institutions and Services: General
- Thema
-
market liquidity
corporate finance
designated market makers
insider trading
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Skjeltorp, Johannes A.
Ødegaard, Bernt Arne
- Ereignis
-
Veröffentlichung
- (wer)
-
Norges Bank
- (wo)
-
Oslo
- (wann)
-
2010
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Skjeltorp, Johannes A.
- Ødegaard, Bernt Arne
- Norges Bank
Entstanden
- 2010
Ähnliche Objekte (12)
The rationale for central bank liquidity insurance and liquidity regulation
Ownership Structure and Stock Market Liquidity
Liquidity Provision in the Overnight Foreign Exchange Market
Bond Liquidity at the Oslo Stock Exchange
Liquidity indicators for the Norwegian government bond market
The International Monetary System, 1844-1870: Arbitrage, Efficiency, Liquidity
On the Concavity of the Consumption Function with Liquidity Constraints
Liquidity Management and Central Bank Strength: Bank of England Operations Reloaded, 1889-1910
The Daily Liquidity Effect in a Floor System - Empirical Evidence from the Norwegian Market
The Impact of the Term Auction Facility on the Liquidity Risk Premium and Unsecured Interbank Spreads
Norwegen, 1 Krone
Norwegen, 1 Krone
The rationale for central bank liquidity insurance and liquidity regulation
Ownership Structure and Stock Market Liquidity
Liquidity Provision in the Overnight Foreign Exchange Market
Bond Liquidity at the Oslo Stock Exchange
Liquidity indicators for the Norwegian government bond market
The International Monetary System, 1844-1870: Arbitrage, Efficiency, Liquidity
On the Concavity of the Consumption Function with Liquidity Constraints
Liquidity Management and Central Bank Strength: Bank of England Operations Reloaded, 1889-1910
The Daily Liquidity Effect in a Floor System - Empirical Evidence from the Norwegian Market
The Impact of the Term Auction Facility on the Liquidity Risk Premium and Unsecured Interbank Spreads
Norwegen, 1 Krone
Norwegen, 1 Krone
The rationale for central bank liquidity insurance and liquidity regulation
Ownership Structure and Stock Market Liquidity
Liquidity Provision in the Overnight Foreign Exchange Market
Bond Liquidity at the Oslo Stock Exchange
Liquidity indicators for the Norwegian government bond market
The International Monetary System, 1844-1870: Arbitrage, Efficiency, Liquidity
On the Concavity of the Consumption Function with Liquidity Constraints
Liquidity Management and Central Bank Strength: Bank of England Operations Reloaded, 1889-1910
The Daily Liquidity Effect in a Floor System - Empirical Evidence from the Norwegian Market
The Impact of the Term Auction Facility on the Liquidity Risk Premium and Unsecured Interbank Spreads
Norwegen, 1 Krone