Cleaning house: Stock reassignments on the NYSE

Amber Anand, Sugato Chakravarty, Chairat Chuwonganant

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

A frequently occurring, yet unexplored, phenomenon of the New York Stock Exchange specialist system is that of reassignments of stocks by specialist firms on the floor of the Exchange. These events change the portfolios at the individual specialist level by reassigning one or more stocks from one individual specialist portfolio to another. We find that reassigned stocks have unusually wide spreads before reassignments and experience a decline in spreads to levels comparable to matched stocks after the reassignment. This improvement in liquidity is associated with a reduced cost of capital for the reassigned firms. We find that portfolio size, and industry and size concentration of the individual specialist portfolios are associated with the decision of specialist firms to reassign stocks.

Original languageEnglish (US)
Pages (from-to)727-753
Number of pages27
JournalJournal of Financial Markets
Volume12
Issue number4
DOIs
StatePublished - Nov 1 2009

    Fingerprint

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this