Costs of Stock Trading by Study on Commitment Components
Subject Areas : International Journal of Finance, Accounting and Economics Studies
Keywords: Abnormal commitments, Normal commitments, Short-selling constraints, Stock trading costs,
Abstract :
In this paper, we are examining the relationship between stock trading costs and commitment components and find both abnormal and normal commitments associated with these costs are associated. Moreover, stock trading costs have a greater influence by both abnormal and normal negative commitments more than positive commitments. Further analysis has shown that in general, investors are unable to break up positive or negative abnormal commitments from earnings. Additionally, investors overrate the continuity of both positive and negative normal commitments. Theseintuitions form more witness of the low degree of market efficiency. It seem investors depend on commitments and they overrate value when abnormal and normal commitments are positive and underestimate it when they are negative, So this propels to asymmetric effect on trading costs between positive and negative commitments in the face of short-selling constraints.