NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Ingrid Werner

Fisher College of Business
Ohio State University
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Columbus, OH 43210
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NBER Working Papers and Publications

August 2013The Twilight Zone: OTC Regulatory Regimes and Market Quality
with Ulf Br├╝ggemann, Aditya Kaul, Christian Leuz: w19358
We analyze a comprehensive sample of more than 10,000 U.S. OTC stocks. We provide much needed descriptive evidence on this market and show that the OTC market is a large, diverse, and dynamic trading environment with a rich set of regulatory and disclosure regimes, comprising venue rules and state laws beyond SEC regulation. We also exploit the institutional richness of the OTC market and analyze two key dimensions of market quality, liquidity and crash risk, across firms and regulatory regimes. We find that OTC firms that are subject to stricter regulatory regimes and disclosure requirements have higher market quality (higher liquidity and lower crash risk). Our analysis points to an important trade-off in regulating the OTC market and protecting investors: Lowering regulatory requirement...
January 1994International Equity Transactions and U.S. Portfolio Choice
with Linda L. Tesar
in The Internationalization of Equity Markets , Jeffrey A. Frankel, editor
 
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