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Entrepreneurial Stock Brokering and Switching Costs


  • G. Geoffrey Booth

    (Eli Broad Graduate School of Management, Michigan State University)

  • Orkunt M. Dalgic

    (State University of New York at New Paltz)

  • Juha-Pekka Kallunki

    (University of Oulu, Finland)

  • Petri Sahlström

    (University of Oulu, Finland)


Stock brokers are entrepreneurs who incur switching costs when the change brokerage houses. We use Helsinki Stock Exchange data to investigate these costs by examining whether investors are loyal to their brokers when brokers move. We find that investors who have extant relationships with the new house are more likely to attract the investors from the old houses, and savvy (knowledgeable) investors are more likely to stay with their broker.

Suggested Citation

  • G. Geoffrey Booth & Orkunt M. Dalgic & Juha-Pekka Kallunki & Petri Sahlström, 2007. "Entrepreneurial Stock Brokering and Switching Costs," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 12(1), pages 1-8, Spring.
  • Handle: RePEc:pep:journl:v:12:y:2007:i:1:p:1-8

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    References listed on IDEAS

    1. Frieder, Laura & Subrahmanyam, Avanidhar, 2005. "Brand Perceptions and the Market for Common Stock," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(01), pages 57-85, March.
    2. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 515-539.
    3. Grossman, Sanford J, 1992. "The Informational Role of Upstairs and Downstairs Trading," The Journal of Business, University of Chicago Press, vol. 65(4), pages 509-528, October.
    4. Luigi Zingales, 2000. "In Search of New Foundations," Journal of Finance, American Finance Association, vol. 55(4), pages 1623-1653, August.
    5. G. Geoffrey Booth & Ji-Chai Lin & Teppo Martikainen & Yiuman Tse, 2002. "Trading and Pricing in Upstairs and Downstairs Stock Markets," Review of Financial Studies, Society for Financial Studies, vol. 15(4), pages 1111-1135.
    6. Grinblatt, Mark & Keloharju, Matti, 2000. "The investment behavior and performance of various investor types: a study of Finland's unique data set," Journal of Financial Economics, Elsevier, vol. 55(1), pages 43-67, January.
    7. Mark Grinblatt, 2001. "How Distance, Language, and Culture Influence Stockholdings and Trades," Journal of Finance, American Finance Association, vol. 56(3), pages 1053-1073, June.
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    More about this item


    Stock Brokers; Switching Costs; Relationships; Helsinki Stock Exchange;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets


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