Abstract

http://ssrn.com/abstract=2348730
 
 

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Algorithmic Trading and Changes in Firms’ Equity Capital


Ekkehart Boehmer


Singapore Management University - Lee Kong Chian School of Business

Kingsley Y. L. Fong


University of New South Wales - School of Banking and Finance; Financial Research Network (FIRN)

Juan (Julie) Wu


University of Georgia

November 1, 2013


Abstract:     
We assess the effect of algorithmic trading (AT) on firms’ capital raising activities. We use a large, international sample from 2001 to 2011 that incorporates intraday transactions data from 42 exchanges and an average of 21,552 common stocks. Greater AT intensity reduces net equity issues over the next year, and net equity declines with both firm-specific and market-wide AT intensity. But these effects are only partly driven by AT’s effect on proceeds from new securities issues. Instead, the main driver of this relationship is AT’s effect on share repurchases. Our results suggest that AT intensity is related to managerial decision making regarding firms’ capital structures.

Number of Pages in PDF File: 32

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Date posted: November 1, 2013  

Suggested Citation

Boehmer, Ekkehart and Fong, Kingsley Y. L. and Wu, Juan (Julie), Algorithmic Trading and Changes in Firms’ Equity Capital (November 1, 2013). Available at SSRN: http://ssrn.com/abstract=2348730 or http://dx.doi.org/10.2139/ssrn.2348730

Contact Information

Ekkehart Boehmer (Contact Author)
Singapore Management University - Lee Kong Chian School of Business ( email )
Singapore

Kingsley Y. L. Fong
University of New South Wales - School of Banking and Finance ( email )
Sydney, NSW 2052
Australia
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Juan (Julie) Wu
University of Georgia ( email )
Dept. of Finance, Terry College of Business
University of Georgia
Athens, GA 30602-6254
United States
HOME PAGE: http://www.terry.uga.edu/directory/profile/juliewu/
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