Options Trading Activity and Firm Valuation

descriptionPublicationkeyboard_double_arrow_right Article , Other literature type 01 Jan 2007 United States English Publisher:Elsevier BVJournal:SSRN Electronic Journal (eissn: 1556-5068,

Copyright policy )

Authors: Roll, Richard; Schwartz, Eduardo; Subrahmanyam, Avanidhar;

doi: 10.2139/ssrn.1087112 , 10.1016/j.jfineco.2009.02.002

Options Trading Activity and Firm Valuation

- Summary
- Subjects
- Metrics

Abstract

We study the effect of options trading volume on the value of the underlying firm after controlling for other variables that may affect firm value. The volume of options trading might have an effect on firm value because it helps to complete the market (allocational efficiency) and because the options market impounds information faster than the stock market (informational efficiency). We find that firms with more options trading have higher values. This result holds for all sample firms and for the subset of firms with positive options volume.

Country

United States

Related Organizations

National Bureau of Economic Research
United States
UNSW Sydney
Australia
California Institute of Technology
United States
University of California, Los Angeles
United States
Simon Fraser University
Canada

Keywords

330, Options markets, Tobin's q, Trading volume, 650

Impact byBIP!

	selected citations These citations are derived from selected sources. This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).	170
	popularity This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.	Top 1%
	influence This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).	Top 10%
	impulse This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.	Top 10%