Working Paper: NBER ID: w12661
Authors: Eugene N. White
Abstract: In the months prior to the stock market crash of 1929, the price of a seat on the New York Stock Exchange was abnormally low. Rising stock prices and volume should have driven up seat prices during the boom of 1929; instead there were negative cumulative abnormal returns to seats of approximately 20 percent in the months just before the crash. At the same time, trading nearly ceased in the thin markets for seats on the regional exchanges. Brokers appear thus to have anticipated the October 1929 crash, although investors in the market apparently did not recognize this information.
Keywords: No keywords provided
JEL Codes: G10; N22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| brokers' expectations regarding market behavior (D84) | seat prices (D49) |
| seat prices (D49) | brokers' expectations of future market declines (G17) |
| cumulative abnormal returns of seat prices (G12) | brokers' expectations regarding market behavior (D84) |
| brokers' access to order flow and market information (G24) | brokers' expectations regarding market behavior (D84) |
| brokers' expectations regarding market behavior (D84) | trading behavior (G41) |
| seat prices (D49) | trading volume (G15) |
| brokers' expectations regarding market behavior (D84) | overall market conditions (L19) |