Special issue on stock exchange price currents, financial information and market transparency

Article

Stock exchange price currents, financial information and market transparency: an introduction

Joost Jonker and Angelo Riva

Pages 271-286

DOI: https://doi.org/10.1017/S0968565022000105

Financial markets derive their political and societal legitimacy from their ability to produce fair and accurate prices. However, reviewing the literature on how stock exchanges price securities, we find an inherent tension between market organization and price disclosure, which is borne out by this special issue's historical case studies.

Prices: sources, problems, solutions

Peter M. Solar

Pages 287-309

DOI: https://doi.org/10.1017/S0968565022000221

Price currents and newspapers are major sources of information on prices during the eighteenth and nineteenth centuries, but drawing conclusions about trends and fluctuations in values from the quotations in these sources poses several recurrent difficulties. After discussing the origins of the prices in these sources, we use a range of examples, mainly involving commodity prices, to illustrate important problems in working with historical price data. These include missing observations and price inertia, varying gaps between low and high price quotations, and the splicing together of price series from different sources or for different commodity qualities. The last two problems often arise from changes over time in the detail with which prices for heterogeneous commodities were reported.

De-coding the image of the firm: secret reserves and internal financing in the German chemical industry, c. 1890–1916

Frederic Steinfeld

Pages 310-325

DOI: https://doi.org/10.1017/S0968565022000245

This article uses the leading firms of the German chemical industry as a case study to provide a detailed example of how companies in the late nineteenth and early twentieth century used internal financing as an instrument of corporate finance. It traces the at first diverse significance of internal financing for the industry and identifies two moments of market concentration that triggered a convergence of corporate finance by a harmonisation of accounting standards that were not predefined by legal frameworks. The article argues that secret reserves and further ways of internal financing were key components of this harmonisation. The industry-wide creation of secret reserves cloaked the companies’ actual financial strength from outsiders who were merely left with an image of the respective firms that was carefully drafted by companies’ managers.

Helsinki Stock Exchange: trading and listed securities, 1912–1981

Mika Vaihekoski

Pages 326-341

DOI: https://doi.org/10.1017/S0968565022000208

A newly collected historical database for the Helsinki Stock Exchange (HSE) is used to analyse the number and structure of listed equity securities. The analysis shows that from its establishment in October 1912 to the end of 1981, a total of 849 different stock series and related issue rights have been listed on the HSE. Of these, 206 are normal stock series and they represent 167 different companies. The two largest industries represented on the HSE during most of the analysed period are metal and manufacturing and pulp and paper industries. Together they represented more than half of the listed companies throughout most of the sample period.

Stock exchange regulation and the official price lists of the stock exchanges of Brussels and Antwerp, 1801-1935

Johan Poukens, Frans Buelens

Pages 342-357

DOI: https://doi.org/10.1017/S0968565022000117

To fully understand and exploit the contents of stock exchange official price lists, an in-depth knowledge of local stock exchange regulations and practices is required. This article offers a comparative perspective on price discovery and quotation on the two most important Belgian stock exchanges, Brussels and Antwerp, from their establishment in 1801 up to the reform of 1935.

Market access and transparency: the Genoa and Milan stock exchanges from Italian Unification to World War I

Angelo Riva

Pages 358-375

DOI: https://doi.org/10.1017/S0968565022000233

This article focuses on the conflicts over market access rules on the two primary Italian stock exchanges, Milan and Genoa. These conflicts disrupted the quality of information produced by the two markets. Official brokers aimed to defend their monopoly on brokerage and capture rents by limiting market access. Banks wanted wider access so as to avoid paying these rents, create an opaque market and maximize the benefit from their informational advantage. At the turn of the twentieth century, the Milan Exchange implemented a transparent market organization while the Genoa Exchange remained opaque, creating a complementarity between them which fostered the development of the securities market overall. When in 1907 a violent crisis erupted in the dominant Genoa Exchange, legislation was adopted to harmonize the organization of the Italian exchanges.

From free-for-all to self-governing monopoly: market organization and price information at the Amsterdam Stock Exchange, 1796-1940

Abe de Jong, Joost Jonker, Johan Poukens

Pages 376-391

DOI: https://doi.org/10.1017/S0968565022000154

For most of its history Amsterdam securities trading was entirely unregulated and spread over various venues frequented by different social groups, handicapping price transparency. A public price current emerged only in 1796 and then with wide bid-ask spreads to protect margins. To combat the confusion a curious pricing method, the mid-price system, emerged during the nineteenth century. Tied to a market microstructure centring on hoekmannen (market makers), this system transited effortlessly from a public market into a monopoly by 1913, self-governing, still without any government regulation, and offering wide rent-seeking opportunities.