Soft Dollars and the Brokerage Industry (Reprint 034)

Marshall E. Blume

Rodney L. White Center for Financial Research Working Papers from Wharton School Rodney L. White Center for Financial Research

Abstract: Large investors frequently receive some type of research service in return for sending an equity trade to a specific brokerage firm. The commissions so directed are associated with the term "soft dollars." This study employs a survey of institutional managers and a sample of their trading records to examine the effect of soft dollars on the structure of the brokerage industry and finds that these effects have been significant in redirecting order flow to different types of brokers. Additionally, there is some evidence that investment managers tend to send their easier orders to brokerage houses providing research for soft dollars and their harder orders to more traditional brokerage houses that are more likely to commit their own capital to facilitate a trade. Furthermore, investment managers tend to be less pleased with the quality of execution for certain types of soft dollar transactions.

References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:pennfi:12-92

Access Statistics for this paper

More papers in Rodney L. White Center for Financial Research Working Papers from Wharton School Rodney L. White Center for Financial Research Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().