Direct stock purchase plans using batch trades

Authors

  • Raymond M. Johnson Department of Economics and Finance, Auburn University Montgomery, School of Business
  • Joseph A. Newman Department of Economics and Finance, Auburn University Montgomery, School of Business

DOI:

https://doi.org/10.61190/fsr.v21i3.4675

Keywords:

Investing, Batch trades, Dollar-cost-averaging, Direct stock purchase plans

Abstract

Direct stock purchase plans offer low trading costs. However, some plans batch orders and execute trades once per week. If prices spike during batch buying, or plummet during batch selling, low trading costs may be offset by unfavorable prices. This study examines daily high and low stock prices for companies whose plans require batch trades once per week. Results suggest that not a single company has higher or lower stock prices on any trade day of the week. Therefore, investors can use these plans without concern that they will buy high and sell low.

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Published

2012-09-30

How to Cite

Johnson, R. M., & Newman, J. A. (2012). Direct stock purchase plans using batch trades. Financial Services Review, 21(3), 227–237. https://doi.org/10.61190/fsr.v21i3.4675

Issue

Vol. 21 No. 3 (2012): FSR Fall 2012

Section

New Original Submission

License

Copyright (c) 2012 Academy of Financial Services

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