Flying Under the Radar: The Real Effects of Anonymous Trading

46 Pages Posted: 7 Dec 2020

See all articles by Najah Attig

Najah Attig

Dalhousie University

Sadok El Ghoul

University of Alberta - Campus Saint-Jean

Date Written: October 27, 2020


Using unique data on TSX Attributed Trading and a new proxy of Tobin’s Q that accounts for intangible capital (Peters and Taylor, 2017), we investigate the impact of anonymous trading (AT) on managers’ ability to obtain informative feedback from the stock market to improve investment efficiency. We show that AT reduces investment efficiency and that both anonymous buyer-initiated and seller-initiated trades have comparable effects. The negative effect of AT on managerial learning from stock prices is significant for both buyer- and seller-initiated trades but is significant only for tangible investments. Taken together, our new evidence indicates that AT distorts investment sensitivity to Tobin’s Q, plausibly because anonymity attracts additional (uninformed) liquidity trading, which negatively impacts the effectiveness of asset price in aggregating private information and in revealing fundamentals.

Keywords: Anonymous trading, informative feedback, Tobin’s Q, investment efficiency

JEL Classification: G12; G31

Suggested Citation

Attig, Najah and El Ghoul, Sadok, Flying Under the Radar: The Real Effects of Anonymous Trading (October 27, 2020). Available at SSRN: or

Najah Attig

Dalhousie University ( email )

Rowe School of Business
6100 University Avenue
Halifax, Nova Scotia B3H 4R2
902-494-7486 (Phone)


Sadok El Ghoul (Contact Author)

University of Alberta - Campus Saint-Jean ( email )

Edmonton, Alberta T6G 2R3
780-465-8725 (Phone)
780-465-8760 (Fax)

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