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Forestalling floor closure: evidence from a natural experiment on the German stock market

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  • Christiane Goodfellow
  • Martin T. Bohl

Abstract

This article contributes to the debate about the relative qualities of floor and electronic trading systems by analysing the effects of bringing forward the Xetra closing time from 8.00 pm to 5.30 pm in November 2003, while the Frankfurt floor remains open until 8.00 pm. This natural experiment provides a ‘cleaner’ institutional setting than in Venkataraman (2001), as it enables us to investigate trading quality on both platforms for the same stocks in the same country before and after the event. The empirical evidence suggests that primarily institutional investors trading in large stocks transfer to the floor when Xetra closes earlier. It appears that investors remain with Xetra for informed trading though.

Suggested Citation

  • Christiane Goodfellow & Martin T. Bohl, 2012. "Forestalling floor closure: evidence from a natural experiment on the German stock market," Applied Economics, Taylor & Francis Journals, vol. 44(6), pages 793-802, February.
  • Handle: RePEc:taf:applec:44:y:2012:i:6:p:793-802 DOI: 10.1080/00036846.2010.524626
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    1. Matsusaka, John G & Palda, Filip, 1999. "Voter Turnout: How Much Can We Explain?," Public Choice, Springer, vol. 98(3-4), pages 431-446, March.
    2. John Lott, 2009. "Non-voted ballots, the cost of voting, and race," Public Choice, Springer, vol. 138(1), pages 171-197, January.
    3. Jan Vermeir & Bruno Heyndels, 2006. "Tax policy and yardstick voting in Flemish municipal elections," Applied Economics, Taylor & Francis Journals, vol. 38(19), pages 2285-2298.
    4. Eiji Yamamura, 2011. "Effects of social norms and fractionalization on voting behaviour in Japan," Applied Economics, Taylor & Francis Journals, vol. 43(11), pages 1385-1398.
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