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The Atlantic Telegraph Cable and Capital Market Information Flows

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  • HOAG, CHRISTOPHER

Abstract

The completion of the undersea Atlantic telegraph cable more closely integrated securities markets on two continents. This article conducts an event study on the introduction of the Atlantic Cable in July 1866. Using daily data on one security with a dual listing on the New York and London stock exchanges, the event study provides some evidence that the information lag between the two markets shortened from ten days to zero days. Cointegration analysis confirms the result. Historical markets priced securities so well that transatlantic steamship crossing times can be recovered from stock prices.

Suggested Citation

  • Hoag, Christopher, 2006. "The Atlantic Telegraph Cable and Capital Market Information Flows," The Journal of Economic History, Cambridge University Press, vol. 66(2), pages 342-353, June.
    • Handle: RePEc:cup:jechis:v:66:y:2006:i:02:p:342-353_00
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    Citations

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    Cited by:

    1. Rebecca Stuart, 2024. "Measuring stock market integration during the Gold Standard," Cliometrica, Springer;Cliometric Society (Association Francaise de Cliométrie), vol. 18(1), pages 191-220, January.
    2. O’Rourke, Kevin Hjortshøj, 2019. "Economic History and Contemporary Challenges to Globalization," The Journal of Economic History, Cambridge University Press, vol. 79(2), pages 356-382, June.
    3. Wang, Tianyi, 2023. "The Electric Telegraph, News Coverage and Political Participation," IZA Discussion Papers 16317, Institute of Labor Economics (IZA).
    4. Ling-Fan Li, 2015. "Information asymmetry and the speed of adjustment: debasements in the mid-sixteenth century," Economic History Review, Economic History Society, vol. 68(4), pages 1203-1225, November.
    5. Gareth Campbell & Meeghan Rogers, 2017. "Integration between the London and New York Stock Exchanges, 1825–1925," Economic History Review, Economic History Society, vol. 70(4), pages 1185-1218, November.
    6. Peter Koudijs, 2013. "The boats that did not sail: Asset Price Volatility and Market Efficiency in a Natural Experiment," NBER Working Papers 18831, National Bureau of Economic Research, Inc.
    7. Chilosi, David & Federico, Giovanni, 2015. "Early globalizations: The integration of Asia in the world economy, 1800–1938," Explorations in Economic History, Elsevier, vol. 57(C), pages 1-18.
    8. Rebecca Stuart, 2022. "Stock Return Predictability before the First World War," IRENE Working Papers 22-02, IRENE Institute of Economic Research.
    9. Wache, Benjamin, 2021. "Information Frictions, Global Capital Markets, and the Telegraph," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242444, Verein für Socialpolitik / German Economic Association.
    10. Foucault, Thierry & Moinas, Sophie, 2018. "Is Trading Fast Dangerous?," TSE Working Papers 18-881, Toulouse School of Economics (TSE).
    11. Mikio Ito & Kiyotaka Maeda & Akihiko Noda, 2016. "Market Integration in the Prewar Japanese Rice Markets," Papers 1604.00148, arXiv.org, revised Sep 2017.
    12. Kevin Hjortshøj O'Rourke, 2018. "Economic history and contemporary challenges to globalization," Oxford Economic and Social History Working Papers _167, University of Oxford, Department of Economics.
    13. Peter Koudijs, 2016. "The Boats That Did Not Sail: Asset Price Volatility in a Natural Experiment," Journal of Finance, American Finance Association, vol. 71(3), pages 1185-1226, June.

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