Title: Revenue management of small securities houses: evidence from Japanese panel data

Authors: Kenji Matsui, Junsuke Matsuo

Addresses: Faculty of Business Administration, Yokohama National University, 79-4 Tokiwadai, Hodogaya-ku, Yokohama 240-8501, Japan. ' Faculty of Business Administration, Momoyama Gakuin University, Japan Securities Research Institute, 1-1 Manabino, Izumi, Osaka 594-1198, Japan

Abstract: This paper investigates the revenue management of securities companies by estimating an industry-level frontier production function with the use of unique Japanese financial data. The empirical results suggest several important implications. First, and contrary to a widespread view, operating revenue is negatively influenced by the number of branches of a firm, suggesting that securities firms should not always pursue the strategy of establishing more branches to cover a wider geographical market. Moreover, a higher proportion of brokerage commissions in total revenue are associated with lower production efficiency, implying that securities houses should expand profit-making sources outside their brokerage business.

Keywords: securities business; internet securities brokers; revenue management; frontier productivity function; production efficiency; Japan; small firms; operating revenue; brokerage commissions.

DOI: 10.1504/IJRM.2008.020727

International Journal of Revenue Management, 2008 Vol.2 No.4, pp.361 - 375

Published online: 12 Oct 2008 *

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