The Effects of Market Makers and Stock Analysts in Emerging Markets

23 Pages Posted: 4 Sep 2012

See all articles by Karolis Čekauskas

Karolis Čekauskas

Stockholm School of Economics

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: September 2012

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.

Suggested Citation

Čekauskas, Karolis and Gerasimovs, Reinis and Liatukas, Vytautas and Putnins, Talis J., The Effects of Market Makers and Stock Analysts in Emerging Markets (September 2012). International Review of Finance, Vol. 12, Issue 3, pp. 305-327, 2012. Available at SSRN: https://ssrn.com/abstract=2141076 or http://dx.doi.org/10.1111/j.1468-2443.2011.01140.x

Karolis Čekauskas (Contact Author)

Stockholm School of Economics

PO Box 6501
Stockholm, 11383
Sweden

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

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)

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