Title

Tick Sizes, Stock Prices, and Share Turnover: International Evidence

Abstract

We examine tick sizes, stock prices, and share turnover in eighteen stock markets in developed countries and find that differences in mandatory tick sizes explain a significant proportion of the variation in stock prices among markets, and that lower percentage tick sizes are not associated with higher turnover. We consider the implications of these findings for the recent decimalization of stock trading in the United States, and conclude that decimal trading is likely to result in lower stock prices (due to stock splits) with no substantial change in dollar trading volume.

Department(s)

Finance and General Business

Document Type

Article

DOI

https://doi.org/10.1108/eb028762

Keywords

tick size, stock price level, srading volume, decimalization

Publication Date

2002

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