Specialist

The firm or the individual? Empirical evidence from the options markets

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This paper investigates the role of the individual specialist vis-à-vis that of the specialist firm on the quality of markets. While previous studies have not denied the importance of the individual, they have focused exclusively on the performance of the specialist firm. This study is the first empirical test of the specialist as an individual and his influence on market quality. By implication, it tests whether the firm is the appropriate level of analysis. Within specialist firms, we find significant differences in quoting behavior while the evidence on execution quality is mixed. Some firms are able to design an effective mechanism that enforces uniformity in goals of the members of the firm. Considering that exchanges are unable to impose such uniform performance, these firms appear to have better incentive or penalty systems in place. However, the existence of other firms where significant differences in execution quality exist, presents a challenge to policy makers, as differences in execution quality within a firm indicate that the disclosure of market quality needs to be at the post-level, not just at the firm level.

Original languageEnglish (US)
Pages (from-to)555-575
Number of pages21
JournalJournal of Economics and Business
Volume57
Issue number6
DOIs
StatePublished - Nov 2005
Externally publishedYes

Fingerprint

Options markets
Empirical evidence
Execution quality
Market quality
Firm performance
Empirical test
Uniformity
Penalty
Disclosure
Politicians
Levels of analysis
Incentives

Keywords

  • Options market microstructure
  • Specialist

ASJC Scopus subject areas

  • Business, Management and Accounting(all)

Cite this

Specialist : The firm or the individual? Empirical evidence from the options markets. / Anand, Amber.

In: Journal of Economics and Business, Vol. 57, No. 6, 11.2005, p. 555-575.

Research output: Contribution to journalArticle

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