The Effects of Market Makers and Stock Analysts in Emerging Markets

International Review of Finance, Forthcoming

29 Pages Posted: 24 Aug 2011

See all articles by Karolis Cekauskas

Karolis Cekauskas

Stockholm School of Economics, Riga

Reinis Gerasimovs

Stockholm School of Economics, Riga

Vytautas Liatukas

Stockholm School of Economics, Riga

Tālis J. Putniņš

University of Technology Sydney (UTS); Stockholm School of Economics, Riga

Date Written: August 20, 2011

Abstract

We exploit a quasi-experiment to examine the effects of market makers and stock analysts in three emerging stock markets. We find substantial differences in the effects across markets and, in contrast to existing literature, the effects of market makers are not always positive. Our results suggest that the structure of market makers’ agreements and compensation matters for their effects on market quality. Stock analysts, on balance, have marginally positive effects on liquidity and informational efficiency. The benefits of market makers are weaker in the presence of stock analysts, and vice versa, suggesting that market makers and stock analysts are more like substitutes than complements in their effects on market quality.

Keywords: liquidity, informational efficiency, market makers, stock analysts

JEL Classification: G14, G19

Suggested Citation

Cekauskas, Karolis and Gerasimovs, Reinis and Liatukas, Vytautas and Putnins, Talis J., The Effects of Market Makers and Stock Analysts in Emerging Markets (August 20, 2011). International Review of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1915942

Karolis Cekauskas

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia

Reinis Gerasimovs

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia

Vytautas Liatukas

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia

Talis J. Putnins (Contact Author)

University of Technology Sydney (UTS) ( email )

PO Box 123
Broadway
Sydney
Australia
+61 2 9514 3088 (Phone)

Stockholm School of Economics, Riga ( email )

Strelnieku iela 4a
Riga, LV 1010
Latvia
+371 67015841 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
186
Abstract Views
1,069
rank
161,410
PlumX Metrics