The Journal of Economic History



ARTICLES

The Atlantic Telegraph Cable and Capital Market Information Flows


CHRISTOPHER HOAG a1
a1 Assistant Professor of Business Administration and Economics, Coe College, 1220 First Avenue NE, Cedar Rapids, IA, 52402. E-mail: choag@coe.edu.

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.



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