The Effect of Option Trading - Softcover

Li, Keming

 
9789999311403: The Effect of Option Trading
Softcover
ISBN 10: 9999311407 ISBN 13: 9789999311403
Verlag: Eliva Press, 2023

Inhaltsangabe

This paper studies the effect of option trading on corporate investment and financing policies. Based on prior literature, I hypothesize that option market induces informed trading and thus reduces information asymmetry and the cost of capital. As a result, firms with high option trading have more investment and financing. Specifically, based on the United States public data, this paper finds that option trading volume increases corporate investment and financing, but reduces cash holdings and corporate payouts. These results are robust to the inclusion of industry or firm fixed effect, a control for endogenous options trading, and the use of alternative measures of option trading and corporate policies. The effect of option trading is stronger for firms with higher information asymmetry problems. Finally, this paper finds the results are inconsistent with the “quiet Life” hypothesis and the catering hypothesis.

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Verlag
Eliva Press
Erscheinungsdatum
2023
Sprache
Englisch
ISBN 10 
9999311407
ISBN 13 
9789999311403
Einband
Taschenbuch
Anzahl der Seiten
55
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