Showing papers on "Listing (finance) published in 1991"

The effects of option listing on the underlying stocks' return processes

Abstract: The effects of option listing on the returns processes of the underlying securities are examined in this paper by looking at a sample of 200 firms which had options listed on them on the CBOE and the AMEX between 1973 and 1983. We find that the listing of options leads to significantly lower variance in the daily returns or the underlying stocks. We also find that prices adjust much more quickly to new information and that the noise component declines after the listing of options. We trace the speedier price adjustment process to increased information collection after the listing and the reduced noise after the listing to a decline in the bid-ask spread after option listing, partially because of increased competition from market-makers on the option market and partially because of increased institutional interest in the stocks after listing.

Foreign stock listings: benefits, costs, and the accounting policy dilemma

Abstract: As firms enter foreign markets for customers and capital, accounting practitioners must wrestle with cross-border differences in languages, customs, accounting conventions, and auditing standards. Stock exchanges in the U.S. claim that they are at a competitive disadvantage because stringent U.S. reporting requirements discourage foreign firms from listing here. This study presents evidence on three key questions raised by these developments: (1) What are the benefits and costs to listing on a foreign stock exchange? (2) Tb what extent do accounting disclosure requirements influence foreign listing decisions? (3) What are the accounting policy issues posed by foreign stock exchange Ustings and how have regulatory authorities responded?

The Multiple Listing Service, Commission Splits, and Broker Effort

Abstract: This paper examines the impact of split commissions on broker effort in MLS sales. The joint effort of brokers to find a buyer for a given listing is maximized when the broker who locates a buyer first receives the entire commission. In contrast, splitting the commission between the listing and finding broker (when they differ) maximizes the joint profits of brokers. When competition among brokers to acquire listings is considered, however, the split brokers most prefer entails a smaller (though still positive) share for the listing broker in order to reduce wasteful competition for listings. While sellers still prefer to pay only the broker who finds a buyer, brokers may not be willing to acquire and share listings under such an arrangement.

Corporate Headquarters Relocation: Evidence from the Capital Markets

Abstract: This paper assesses the stock market reaction to announcements of corporate headquarters relocations and examines financial and geographical factors related to wealth effects and factors that influence the decision to relocate corporate headquarters. The results indicate that announcements of relocations are associated with significant positive stock price effects. On average, the stock price of relocating firms increases by 1.29% during the two-day period around the announcement. Abnormal returns are positively related to the availability of labor and negatively related to the cost of living in the new location and the change in employment levels. A logit analysis indicates that the probability of a firm relocating is partially determined by the firm size and the rental expenses/sales ratio. The results also indicate that firm size, the employment/asset ratio levels, and listing in the NYSE/AMEX affect the decision to relocate to a Fortune-ranked city. Finally, firms relocating to Fortune-ranked cities are characterized by a high level of insider ownership relative to firms moving to non-ranked cities.

The effect of traded option introduction on shareholder wealth

Abstract: Several authors suggest that the opening of a market in traded options constitutes a “feasibility-expanding” change In this paper evidence on changes in the price of underlying stocks at the time of option listing is examined to determine whether option listing constitutes such a change Evidence supports the hypothesis that call option listing is feasibility expanding, that put option listing is not feasibility expanding, and that call listings closer to the initiation of organized option trading have a larger impact relative to later listings

Is There Hope for Conservation in Africa

Abstract: The listing of the African elephant in Appendix I to the Convention on International Trade in Endangered Species in late 1989 provided a dramatic indicator of the overwhelming pressures threatening the natural heritage of a number of states in Africa. While both their leaders and international organisations express concern about the longterm environmental stability of many areas, the more immediate economic difficulties in producing enough food and obtaining sufficient foreign exchange to finance essential imports and service debts mean that effective conservation measures have been largely neglected.

The Short Life and Resurrection of SEC Rule 19C-4

Abstract: In the 1980s, many corporations adopted disparate voting rights plans (also known as dual class stock plans) to concentrate voting control in the hands of incumbent managers and their allies. At most adopting firms, such plans were intended mainly to deter unsolicited takeover bids. Incumbent managers who cannot be outvoted, after all, cannot be ousted. In 1988, the Securities and Exchange Commission adopted rule 19c-4 pursuant to a claim of regulatory authority under Section 19(c) of the Securities Exchange Act of 1934. Rule 19c-4 purported to amend the listing standards of the self-regulatory organizations (i.e., the major stock exchanges and NASDAQ) so as to prohibit most forms of dual class stock. The United States Court of Appeals for the District of Columbia Circuit, however, subsequently invalidated rule 19c-4 as exceeding the scope of the SEC's delegated authority. This article reviews the history of dual class stock and stock exchange listing standards affecting it. The article then demonstrates that the D.C. Circuit was correct in concluding that the SEC lacked authority to adopt rule 19c-4. Finally, the article proposed an alternative exchange listing standard that responded to the conflict of interest inherent when management proposes a dual class stock recapitalization.

Gains from international dual listing

Abstract: This study presents an attempt to explain how international dual listing of securities can reduce the effects of segmented international markets. By applying the mean-variance model we show that, for a return generating process given by the maximum distribution, the expected return on the dually listed security will be higher and the variance associated with it will be lower than for an otherwise identical domestically single listed security. This result appears to be consistent with the existence of dually listed securities in capital markets which are otherwise not integrated.

Size, Liquidity, and the Cost of Equity

Abstract: The inverse association of capitalization and performance is found to hold over a broader range of firms than has been previously studied. This result is found by merging data for listed United States firms with data for listed Australian companies, which are on average much smaller than their North American brethren. For the entire size spectrum and across listing locations, liquidity is found to be related to performance, adding support to the popular belief that it is (perhaps one of) the factor(s) missing from conventional tests of asset pricing. The results suggest that a lack of liquidity, rather than size per se, is a material contributor to the high cost of equity finance experienced by small companies. Some commentators attach much currency to proposals to subsidize small firms by enhancing the liquidity of their shares; the results reported here suggest that such subsidies may be effective.