Showing papers on "Stock exchange published in 1972"

Price impacts of block trading on the new york stock exchange

Abstract: IN AN EFFICIENT market, prices reflect underlying values. This insures the proper allocation of new funds to the most productive areas of the economy. Additionally, individual investors benefit by knowing that prices at which they trade are not subject to forces which have little or nothing to do with the underlying value of the company. Extensive empirical tests which tend to support the efficiency of the stock market have been carried out in the past.' Until recently, however, no tests have been carried out to assess directly the impact of institutional investors on the efficiency of the stock market.2 The purpose of this paper is to examine the extent to which block trading by institutional investors contributes to or detracts from efficient markets. A block trade can be defined as a transaction involving a larger number of shares than can readily be handled in the normal course of the auction market.

Competition and the Pricing of Dealer Service in the Over-the-Counter Stock Market

Abstract: The stock market is in the midst of an era of change unparalleled since the Great Depression, long-standing institutions — including the major stock exchanges — are being radically challenged by contemporary developments, and novel approaches to making markets for common stocks are appearing with increasing frequency. In addition, the Martin Report and the recent hearings of the Securities and Exchange Commission on the future structure of the equities market indicate that the regulatory climate surrounding the stock market can be expected to undergo serious change in the near future.

Risk-Return Classes of New York Stock Exchange Common Stocks, 1931–1967

Abstract: (1972). Risk-Return Classes of New York Stock Exchange Common Stocks, 1931–1967. Financial Analysts Journal: Vol. 28, No. 2, pp. 46-54, 81.

Stock Price Reaction of Multinational Firms to Exchange Realignments

Abstract: Dr. Franck is Professor of International Investment and Trade at Syracuse University. He was Dean of Robert College in Istanbul, Turkey for several years before assuming his current post. He is a contributor to World Business Systems, edited by Jean Boddewyn. Dr. Young is Associate Professor of Finance at Syracuse University. He taught at the Baruch School of Business of the City College of New York before assuming his current post. He is coauthor of The Repurchase of Common Stock.

Ownership and Performance: Stock and Mutual Life Insurance Companies

Abstract: Stock and mutual life insurance companies exhibit different performance characteristics. The results of a comparison made with samples of 19 stocks and 27 mutuals, which operated under New York regulations between 1952 and 1966, provided evidence of these differences. Two performance measures were utilized: percentage increase in assets over the 15 year period and percentage change in net premium income. With both measures the difference was significant at the .01 level. Although the observed stocks and mutuals differed in size and product mix, the performance differences could be attributed to ownership. The research design utilized control hypotheses concerning company size and benefit payout level in order to ascertain if ownership was the causal factor. Compared with possible determinants of corporate performance, ownership has received little attention in economic literatuLre. Although capital stock corporations dominate the American economy, vast resources and productive capacity are held by co-operatives, foundations, government-owned corporations, and mutual companies. An important difference between these corporate types and the capital stock corporation is the nature of property rights inherent in ownership shares. Shares of capital stock corporations may be purchased or sold without quantity restriction at a market determined price. In these other ownership types there is usually neither a market determined price nor unconstrained transactions in equity shares. In the case of mutual life insurance companies, owners must be policyholders and generally may hold no more than one equity share. Capital stock life insurance companies in 1950 provided 30 percent of all U.S. Richard Spiller, Ph.D., is Associate Professor of Marketing in California State College at Long Beach. This paper was presented at the 1971 Annual Meeting of A.R.I.A. life insurance in force. By 1969 their share of market had increased to 48 percent.1 This rapid increase relative to mutual life insurance companies competing in the same market suggests possible performance and behavioral differences in the two ownership types. Although some of the change in the relative position of stocks and mutuals may be attributed to the many new stock companies which began operations during these years, there is evidence of behavioral differences in stocks and mutuals. The objectives of this study are to test the hypothesis that performance of stocks and mutuals differ and to consider some possible causal factors underlying any differences. In a more general sense, this is an effort to provide empirical evidence of the effect of alternate ownership forms on corporate performance. In the life insurance industry, mutual companies compete against profit-oriented firms which have the same market opportunities and comply with essentially the same regulations. Both types of com1 Institute of Life Insurance, Life Insurance Fact Book. New York, 1951, 1970.

The Predictive Content of Interim Reports- A Time Series Analysis

Abstract: The importance of interim reports to investors seems beyond dispute. Summaries of these reports appear in most of the daily newspapers and on stock exchange wire services, and security analysts reportedly incorporate this information into forecasts of yearly earnings.' In addition, the announcement by a firm of quarterly earnings is often accompanied by substantial price changes in the stock of that firm.2 Given this preference for interim reports, the apparent lack of interest in them by the accounting profession is both surprising and difficult to explain. Accountants sometimes justify their rejection of interim reports on the basis that the results are often so inaccurate as to be meaningless. Nevertheless, investors use interim reports, apparently because more information is at least as good as less. Supposition is necessary in explaining the behavior of either group since there is almost no empirical research with which to judge the quality of interim reports vis-a-vis annual reports. However, Green and Segall have provided evidence on the predictive power of first

The supply of money and common stock prices: comment

Abstract: IN A RECENT PAPER' Homa and Jaffee present a forecasting and simulation model in which they (a) predict the Standard and Poor's 500 stock index on a quarterly basis from a regression equation employing the supply of money and its growth rate, and (b) use the predicted values of the SP index to simulate an investor's strategy choice between buying Treasury bills, buying stock or buying stock on margin. They posit that the SP index in period t depends on the supply of money in the same period as well as on the contemporaneous and once lagged growth rate in the supply of money. In order to make their model operational they need a forecast for the supply of money one quarter ahead. They achieve the best results in terms of the investor's rate of return when they assume perfect foresight with respect to the money supply and obtain somewhat inferior results when they predict the money supply on the basis of other variables such as the unemployment rate, the rate of inflation, etc. The rates of return for both techniques, however, are better than could be achieved by the simple buy-and-hold strategy. The purpose of this note is two-fold. First, we propose an alternative model, based more on fiscal rather than on monetary variables for explaining stock prices. Secondly, we emphasize that devising investment strategies by these techniques is, under the best of circumstances, a most hazardous undertaking.

Evidence regarding a segmented stock market

Abstract: FINANCIAL WRITERS discuss the New York Stock Exchange (NYSE), the American Stock Exchange (ASE), and the Over-the-Counter market (OTC) in separate terms because: (1) there is little or no overlap in the stocks in the three locations, (2) requirements for "listing" or trading among the three markets differ, and (3) there are variations in procedures for purchase and sale of stock. Little attention, however, has been given to the notion that these geographically separated markets might in fact have fundamental economic characteristics that distinguish them. Evidence that the three market segments are considered virtually synonymous is provided by the fact that the most widely quoted stock market indicator series (and in most cases the only indicators mentioned) are the Dow-Jones 30 Industrials, the Standard and Poor's 425 Industrials, and recently the New York Stock Exchange Index. A seldom-noted fact, and one of considerable importance, is that all of these stock market indicators limit their samples to stocks listed on the New York Stock Exchange. Employing one of these indicators to describe what is happening to common stock prices in general implies that either the NYSE is the only relevant segment of the stock market, or that as the NYSE goes, so goes all other segments of the stock market. The notion that the NYSE is the only relevant segment of the market can probably be dismissed as unrealistic. While numerous investors, both individual and institutional, limit their activities to the NYSE, there are many more security issues traded OTC than on the NYSE.' While the NYSE is dominant in terms of the value of transactions, it comprises only about 50 to

Corporate Management’s Inclination to Disclose Financial Information

Abstract: (1) Retrospective view of corporate financial disclosure: Corporate management disclosed very little; or n.o financial information to stockholders until the turn of the century. Several corporations did not hold any annual meetings for decades, while others did not publish annual reports for years. The first conventional annual report in the American Business Community was issued, in 1858 by Borden Company.' For a long period of time thereafter, even the largest corporations considered it best to disclose as little information as possible about their operations. In 1895, the New York Stock Exchange began recommending the practice of issuing annual reports and five years later requested companies applying for listing to publish them. The first modern annual report was published in 1902 by United States Steel Company. Its president, Judge E. H. Gary, commented in the. sam.e year, "Corporations cannot work on a principle of locked doors and shut lips." Most of the corporations at that tim.e reacted unfavorably to this break with tradition, and failed to follow United States Steel Company's lead. A census by the New York Stock Exchange in 1926 showed that 242 of the 957 corporations then listed on the Big Board were issuing quarterly reports and 339 were issuing annual reports.2 Since a large number of the corporations failed to issue annual reports, the New York Stock Exchange in 1926 required that a listed corporation must publish and submit to stockholders at least fifteen days in advance of their annual meeting an annual report containing its financial statements. In the years following, the Exchange intensified its efforts to secure ad.equately informative financial reports from listed corporations. By 1933, however, a large number of listed corporations were still failing to disclose such important financial facts as sales and cost of sales.

Issues Confronting the Stock Markets in a Period of Rising Institutionalization

Abstract: The facts of increased institutional trading on the nation's securities markets are by now well known. On the New York Stock Exchange (NYSE), the six major institutional groups—insurance companies, investment companies, noninsured pension funds, nonprofit institutions, common trusts, and mutual savings banks, now own more than one-fourth of the market value of listed shares compared with less than 16 percent at the end of 1956. But, ownership is merely the tip of the perennial iceberg, since institutional trading of stock has become much more significant than institutional ownership. This fact is pointed up in the recent SEC Study of Institutional Investors. It shows that there has been a relatively slow increase in the share of outstanding stock owned by institutions in all markets, but the institutional share of trading has mushroomed.

Abstract: Stock Price Movements of Firms Engaging in Large Acquisitions

Abstract: During the past two decades, corporate managements have been increasingly Interested in growth through mergers and acquisitions. This external growth trend has been accompanied by the development of several merger strategies and philosophies. As a result, merger literature is frequently concerned with concepts such as price-earnings ratio strategy [13] and merger synergy. Synergy may be operational (e.g., the development of marketing or production economies) and/or financial in nature. Although financial synergy may produce “real” benefits (e.g., a lower cost of capital or increased cash flows), it is the general custom today to associate financial synergy with temporary [8], pecuniary [10], or instantaneous [9] earnings per share benefits.

Europe and the Great Crisis

Abstract: Did the great crash on the Wall Street stock exchange in October 1929 come like a clap of thunder in a clear sky? In some sense, yes. In any case, Europe did not suspect the dangers awaiting her. Curiously enough neither did America; articles in newspapers and reviews of that period show that nobody realised that an economic disaster was imminent. The anxiety aroused by the ‘crash’ was but limited; it was considered to be a purely financial crisis, which would be overcome as other panics had been overcome — situations on the New York stock exchange were so readily exaggerated for the better or for the worse.

Toward a National System of Securities Exchanges: The Third and Fourth Markets

Abstract: The federal securities laws of the United States require the registration of stock exchanges and of securities.' A security must be registered with the United States Securities and Exchange. Commission ("SEC") and approved for listing by a registered stock exchange before it may be traded on any such exchange. The application for listing must be filed by the issuer of that security, although a security listed on one registered stock exchange may be admitted to unlisted trading privileges on other registered stock exchanges upon the application of the latter exchange.2 Each of the registered stock exchanges has its own listing standards concerning the quality of the security and the breadth of investor interest in it, as well as requirements for continuing disclosure of information by the issuer.' Although a few very respected issuers have chosen not to list their common stocks, listed stocks are generally of higher quality than unlisted stocks. The quality of the stocks listed on any particular registered stock exchange is related to the rigor of its listing standards. Generally, the stock listed on the New York Stock Exchange ("NYSE") are of the highest quality, followed by those listed on the American Stock Exchange and followed still by those listed on the various regional stock exchanges. Although the principal market for most listed bonds is over the counter, registered stock exchanges have rules requiring their members to execute on their floors all transactions in stocks that they have listed, unless certain conditions have been met.4 Although the NYSE once attempted to prohibit its members from trading NYSE listedstocks as principal on other registered stock exchanges where they were also admitted to trading, the SEC held in 1941 that any such prohibition was anti-competitive and consequently illegal.5 Nevertheless, the exchanges have continued to inhibit their members from executing transactions in listed stocks in the over-the-counter market either as principal or as agent, and these inhibitions have been extremely effective. The SEC, however, has recently indicated that competitive barriers between the exchange and over-the-counter markets should also be eliminated.6 The over-the-counter market in listed bonds has, of course, long be.en well known. When the SEC conducted its Special Study of the Securities Markets in 1963 it found, much to its own surprise and to the, surprise of many persons, that brokerdealers that were not members of any registered stock exchange were executing a substantial number of overthe counter transactions in listed stocks, primarily with financial institutions. The Special Study coined the phrase "third market" to refer to such over-the-counter transactions in listed stocks by broker-dealers.7 As financial institutions became accustomed to trading listed stocks away from the registered stock exchanges where they are listed, some attempts 1. Footnotes appear at end of article.