Are There Commission Cost Side-Effects from Portfolio Management Decisions?

9 Pages Posted: 29 Jul 2011

See all articles by Robert O. Edmister

Robert O. Edmister

Bowling Green State University - Department of Finance; University of Mississippi - School of Business Administration

Ralph A. Walkling

Drexel University - Lebow College of Business

Date Written: 1983

Abstract

An examination of approximately 28,000 institutional trades over five post-Mayday quarters indicates that security price and liquidity are important determinants of commissions. High priced stocks, being more liquid, are generally less costly to trade than low priced stocks. Possible inventory risks, as measured by the standard deviation of returns, are positively related to commissions, but the explanatory power of this variable is not as great as that of liquidity or price and its practical importance is minimal.

Suggested Citation

Edmister, Robert O. and Walkling, Ralph August, Are There Commission Cost Side-Effects from Portfolio Management Decisions? (1983). Financial Analysts Journal, p. 3, 1983. Available at SSRN: https://ssrn.com/abstract=917877

Robert O. Edmister

Bowling Green State University - Department of Finance ( email )

Business Administration 201
Bowling Green, OH 43403
United States

University of Mississippi - School of Business Administration ( email )

PO Box 3986
Oxford, MS 38677
United States
610-232-7470 (Phone)

Ralph August Walkling (Contact Author)

Drexel University - Lebow College of Business ( email )

LeBow College of Business
Philadelphia, PA 19104
United States
(215) 895-4920 (Phone)
(215) 895-6119 (Fax)

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