The Highest Price Ever

The Great Nyse Seat Sale of 1928-1929 and Capacity Constraints

Dados Bibliográficos

ID10103426
AutoresLance E Davis (0000-0003-1384-1610, National Bureau of Economic Research, autor correspondente), Larry Neal (University of Illinois Urbana-Champaign), Eugene N White (0000-0001-6213-8003, Rutgers, the State University of New Jersey), Eugene White
Ano2005
Volume67
Fascículo3
Páginas705-739
Data de publicação2005-08-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Journal of Economic History (JOURNAL)
Identificadores do periódicoISSN: 0022-0507 • E-ISSN: 1471-6372
EditoraCambridge University Press (CUP) (PUBLISHER)
DOI10.1017/s0022050707000289
OpenAlexW2105799212
IdiomaEN
Citações recebidas6
Referências citadas19

A surge in orders during the stock market boom of the late 1920s collided against the constraint created by the fixed number of brokers on the New York Stock Exchange. Estimates of the determinants of individual stock bid-ask spreads from panel data reveal that spreads jumped when volume spiked, confirming contemporary observers complaints that there were insufficient counterparties. When the position of the NYSE as the dominant exchange became threatened, the management of the exchange proposed a 25 percent increase in the number of seats in February 1929 by issuing a quarter-seat dividend to all members. While such a "stock split" would be expected to leave the aggregate value of the NYSE unchanged, an event study reveals that its value rose in anticipation of increased efficiency. These expectations were justified as bid-ask spreads became less sensitive to peak volume days after the increase in seats

Boom · Business · Dividend · Economics · Financial economics · Geography · Monetary economics · Statistics · Stock (firearms · Stock exchange · Value (mathematics · Corporate Finance and Governance · Finance · Financial Markets and Investment Strategies · Mathematics · Monetary Policy and Economic Impact