Churning : Excessive Trading in Retail Securities Accounts  

Oleh:

Brown, Stewart L.

Jenis: Article from Bulletin/Magazine
Dalam koleksi: FINANCIAL SERVICES REVIEW vol. 5 no. 1 (1996), page 43-56.
Topik: trading; churning; trading; retail securities; accounts

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: FF18 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

Churning involves excessive trading by stockbrokers in order to generate commissions. Current practice uses the turnover ratio to detect excessive trading. The turnover ratio is a flawed indicator of the actual harm of excessive trading which is commissions. This paper examines the intersection of law and financial analysis in the retail securities arena. A unique set of data from 23 actual churning cases is used to argue that the turnover ratio should be replaced by a more direct measure of the trading costs : the commission to equity ratio. An appropriate benchmark related to the return on common stocks is suggested to gauge excessive trading in a commission context.

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