We investigate competition between traditional stock exchanges and new ?dark? trading
venues using an important difference in regulatory treatment. SEC required minimum pricing increments constrain some stock spreads, causing large limit order queues. Dark pools allow some traders to by-pass existing limit order queues with minimal price improvement.
Using a regression discontinuity design, we find spread constraints significantly weaken exchanges? competitiveness. As more orders migrate to dark pools,
the probability of subsequent order execution there increases, raising liquidity. The ability
to circumvent time priority of displayed limit orders is one cause of the rapid rise in U.S.
equity market fragmentation.
We study shareholder voting in a model in which trading affects the composition of the shareholder base. In this model, trading and voting are complementary, which gives rise to self-fulfilling expectations about proposal acceptance. We show...Read more
This paper looks at the phenomenon of “defensive regulatory competition” in European corporate law following Centros, Überseering and Inspire Art. In order to retain control over the corporate governing...Read more
We develop a model of competition for managerial talent in which firms asymmetrically learn about the ability of their managers. In equilibrium, firms actively attempt and succeed at poaching talent from competitors, even in the absence of gains...Read more
The public company has historically been a crucial element of the American economy. Various predictions have been made recently that the public company’s future is bleak. This essay maintains these gloomy conjectures are erroneous. Companies...Read more