32 Pages Posted: 1 Nov 2013
Date Written: November 1, 2013
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.
Suggested Citation: Suggested Citation
Boehmer, Ekkehart and Fong, Kingsley Y. L. and Wu, J. (Julie), Algorithmic Trading and Changes in Firms’ Equity Capital (November 1, 2013). Available at SSRN: https://ssrn.com/abstract=2348730 or http://dx.doi.org/10.2139/ssrn.2348730