Menkveld, Albert J.; Wang, Ting - In: Journal of Financial Markets 16 (2013) 3, pp. 571-603
A poor liquidity level and a high liquidity risk significantly raise the required return for small-cap stocks. Euronext allows these firms to hire designated market makers (DMMs) who guarantee a minimum liquidity supply for a lump sum annual fee. In an event study based on 74 DMM stocks, we find...