Performance of institutional trading desks

An analysis of persistence in trading costs

Amber Anand, Paul Irvine, Andy Puckett, Kumar Venkataraman

Research output: Contribution to journalArticle

45 Citations (Scopus)

Abstract

Using a proprietary dataset of institutional investors' equity transactions, we document that institutional trading desks can sustain relative performance over adjacent periods. We find that trading-desk skill is positively correlated with the performance of the institution's traded portfolio, suggesting that institutions that invest resources in developing execution abilities also invest in generating superior investment ideas. Although some brokers can deliver better executions consistently over time, our analysis suggests that trading-desk skill is not limited to a selection of better brokers. We conclude that the trade implementation process is economically important and can contribute to relative portfolio performance.

Original languageEnglish (US)
Pages (from-to)557-598
Number of pages42
JournalReview of Financial Studies
Volume25
Issue number2
DOIs
StatePublished - Feb 2012

Fingerprint

Institutional trading
Trading costs
Broker
Persistence
Institutional investors
Resources
Portfolio performance
Equity
Implementation process
Relative performance

Keywords

  • G12
  • G23
  • G24

ASJC Scopus subject areas

  • Finance
  • Accounting
  • Economics and Econometrics

Cite this

Performance of institutional trading desks : An analysis of persistence in trading costs. / Anand, Amber; Irvine, Paul; Puckett, Andy; Venkataraman, Kumar.

In: Review of Financial Studies, Vol. 25, No. 2, 02.2012, p. 557-598.

Research output: Contribution to journalArticle

Anand, Amber ; Irvine, Paul ; Puckett, Andy ; Venkataraman, Kumar. / Performance of institutional trading desks : An analysis of persistence in trading costs. In: Review of Financial Studies. 2012 ; Vol. 25, No. 2. pp. 557-598.
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