Commission-Motivated Brokers Across The Production Month

Authors

  • Earl D. Benson Depaitment of Finance, Marketing, and Decision Sciences, Western Washington University, Bellingham, WA 98225
  • David S. Rystrom Depaitment of Finance, Marketing, and Decision Sciences, Western Washington University, Bellingham, WA 98225.
  • Greg T. Smersh Department of Finance, Insurance, and Real Estate, College of Business Administration, University of Florida, Gainesville, FL 32611

DOI:

https://doi.org/10.1016/1057-0810(95)90004-7

Abstract

The intramonthpattem of broker commission earnings is examinedfor a sample of one hundred brokers from a national brokerage firm. It is hypothesized that the structure of broker commissions leads to distortions in trading. The evidence shows that in the last five days of the production month, more than one-fourth of the brokers earned a significantly higher proportion of their monthly commissions than would be expected if trading were uniform across the month. This suggests that the structure of the commission system may lead some brokers to encourage individual investors to unnecessarily trade securities near the end of the production month to boost their commission income.

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Published

1995-12-30

How to Cite

Benson, E. D., Rystrom, D. S., & Smersh, G. T. (1995). Commission-Motivated Brokers Across The Production Month. Financial Services Review, 4(2), 81–95. https://doi.org/10.1016/1057-0810(95)90004-7

Issue

Vol. 4 No. 2 (1995): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1995 JAI Press Inc.

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