Cleaning house: Stock reassignments on the NYSE

Amber Anand; Sugato Chakravarty; Chairat Chuwonganant

doi:10.1016/j.finmar.2009.07.001

Cleaning house: Stock reassignments on the NYSE

Amber Anand, Sugato Chakravarty, Chairat Chuwonganant

Whitman School of Management

Research output: Contribution to journal › Article › peer-review

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 language	English (US)
Pages (from-to)	727-753
Number of pages	27
Journal	Journal of Financial Markets
Volume	12
Issue number	4
DOIs	https://doi.org/10.1016/j.finmar.2009.07.001
State	Published - Nov 1 2009

ASJC Scopus subject areas

Finance
Economics and Econometrics

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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.",

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