Tick Size, Share Prices, and Stock Splits on JSTOR

The Journal of Finance

Description:

The Journal of Finance publishes leading research across all the major fields of financial research. It is the most widely cited academic journal on finance and one of the most widely cited journals in economics as well. Each issue of the journal reaches over 8,000 academics, finance professionals, libraries, government and financial institutions around the world. Published six times a year, the journal is the official publication of the American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
JSTOR provides a digital archive of the print version of The Journal of Finance. The electronic version of the The Journal of Finance is available at http://www.interscience.wiley.com/. Authorized users may be able to access the full text articles at this site.

Coverage: 1946-2014 (Vol. 1, No. 1 - Vol. 69, No. 6)

Moving Wall: 3 years (What is the moving wall?)

The "moving wall" represents the time period between the last issue available in JSTOR and the most recently published issue of a journal. Moving walls are generally represented in years. In rare instances, a publisher has elected to have a "zero" moving wall, so their current issues are available in JSTOR shortly after publication.
Note: In calculating the moving wall, the current year is not counted.
For example, if the current year is 2008 and a journal has a 5 year moving wall, articles from the year 2002 are available.

Terms Related to the Moving Wall: Fixed walls: Journals with no new volumes being added to the archive.; Absorbed: Journals that are combined with another title.; Complete: Journals that are no longer published or that have been combined with another title.

ISSN: 00221082

EISSN: 15406261

Subjects: Business & Economics, Business, Finance

Collections: Arts & Sciences I Collection, Business & Economics Collection, Business I Collection, JSTOR Essential Collection

Abstract

Minimum price variation rules help explain why stock prices vary substantially across countries, and other curiosities of share prices. Companies tend to split their stock so that the institutionally mandated minimum tick size is optimal relative to the stock price. A large relative tick size provides an incentive for dealers to make markets and for investors to provide liquidity by placing limit orders, despite its placing a high floor on the quoted bid-ask spread. A simple model suggests that idiosyncratic risk, firm size, and visibility of the firm affect the optimal relative tick size and thus the share price.

If You Use a Screen Reader

Tick Size, Share Prices, and Stock Splits

Select the topics that are inaccurate.

Abstract