This study explores the effect of internal control weakness (hereafter ICW) and their remediation on market liquidity, as measured by bid-ask spreads, for firms filed Section 404 reports with the SEC. First, we find that spreads are wider for ICW firms than for non-ICW firms. Such an association...

We develop a model of an order-driven exchange competing for order flow with off-exchange trading mechanisms. Liquidity suppliers face a trade-off between benefits and costs of order exposure. If they display trading intentions, they attract additional trade demand. We show, in equilibrium,...