Tom Meling

Papers:

Anonymous Trading in Equities. Journal of Finance, April 2021.

Abstract: In this paper, I explore a reform at the Oslo Stock Exchange to assess the causal effect of posttrade trader anonymity on stock liquidity and trading volume. Using a regression discontinuity approach, I find that anonymity leads to a reduction in bid-ask spreads of 40% and an increase in trading volume of more than 50%. The increase in trading volume is accounted for largely by increased trading activity by institutional investors, while retail investors do not adjust their trading behavior in response to anonymity. The results suggest that posttrade anonymity positively affects standard measures of market quality.

In the news: Finansavisen (In Norwegian. Summary: In line with the findings of my paper, the OSE recently introduced full trader anonymity in all order books.)

Do Temporary Demand Shocks Have Long-term Effects for Startups? With Hans Hvide. Review of Financial Studies, January 2023.

Abstract: Using procurement auctions and register data, we find that temporary demand shocks have long-term effects on startup outcomes. Startups that win a procurement auction are more than 20% larger in terms of sales and employment than startups that narrowly lose an auction, even several years after the contract work has ended. The effects are unique to startups and economically large; about 50% of the contract value is transmitted into long run sales. The analysis suggests learning-by-doing from contract work as a plausible mechanism. Overall, our results point to the importance of path dependence in shaping the long-term outcomes of startups.

In the news: VoxEU column, forskning.no.

Tick Size Wars: The Market Quality Effects of Pricing Grid Competition. With Sean Foley and Bernt Arne Ødegaard. Review of Finance, March 2023.

Abstract: We explore the effects of a "tick size war" where European exchanges competed directly on the minimum pricing increment in the limit order book, the tick size. We find that exchanges that reduced their tick size immediately captured market shares of quoted and executed volume from exchanges that kept their ticks large. Tick size competition improves market quality, reduces trading costs and increases aggregate depth and volume. These improvements are strongest in stocks where the spread was constrained to one tick, where liquidity providers use the finer pricing grid to engage in price competition.

In the news: Best Execution.

Broadband Internet and the Stock Market Investments of Individual Investors. With Hans Hvide, Magne Mogstad, and Ola Vestad. Journal of Finance, April 2024.

Abstract: We study the effects of broadband internet use on the portfolio selection of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market participation, driven primarily by increased fund ownership. Existing investors increase the fraction of their portfolios held in funds and do not increase their trading activity in stocks. Access to fast internet seems to induce individual investors to make better financial decisions and hence leads to a "democratization of finance".

In the news: VoxEU column, forskning.no, BFI Insights, Dagens Naeringsliv.

Crypto Tax Evasion.  With Magne Mogstad and Arnstein Vestre. Revise & Resubmit, Journal of Finance.

Abstract:  We quantify the extent of crypto tax noncompliance and evasion, and assess the efficacy of alternative tax enforcement interventions. The context of the study is Norway. This context allows us to address key measurement challenges by combining de-anonymized crypto trading data with individual tax returns, survey data, and information from tax enforcement interventions. We find that crypto tax noncompliance is pervasive, even among investors trading on exchanges that share identifiable trading data with tax authorities. However, since most crypto investors owe little in crypto-related taxes, enforcement strategies need to be well-targeted or cheap for benefits to outweigh costs.

In the news: Washington Center for Equitable Growth, BFI Insights, MarketWatch, FT Alphaville.

New Technology and Entrepreneurship. With Hans Hvide. (Old version titled "New Technology and Business Dynamics").

Abstract:  We examine how firms respond to investment opportunities created by new technologies, testing the hypothesis from Schumpeter (1934) that entrepreneurs are particularly responsive. Using the staggered roll-out of broadband internet in Norway as a natural experiment, we find that access to the new technology increases startup rates by about 25%. The effects are stronger in ICT-intensive industries, and treated entrepreneurs are more likely to invest in complementary assets, like computers. Consistent with existing literature, established firms show a more muted response to the new technology. Our findings suggest that entrepreneurs play a key role in adapting the economy to technological change.

Selected work in progress:

Green Waste: Misallocation of Green Investment Subsidies. With Ingvil Gaarder, Morten Grindaker, and Magne Mogstad.

Why Do Larger Firms Have Lower Labor Shares? With Lancelot Henry de Frahan and Thibaut Lamadon.

Other writings:

Addressing pervasive tax evasion by cryptocurrency users. 

Startups and the long-run importance of luck: New evidence. 

Ukritisk selvevaluering av innovasjonsstøtte.

Skal en etatsleder advare mot debatt og sette merkelapp på kritikere?

Tick sizes in illiquid order books.