New Evidence on Price and Volatility Effects of Stock Option Introductions

This paper adds to the literature dealing with the effect of derivatives trading on underlying securities by examining option listings from the Netherlands. The effects on both stock returns and volatility are investigated using three types of samples, namely, listing of call options alone, simultaneous listings of both call and put options, and listings of put options alone. A significant decline in stock price is observed with the introduction of option trading. But, no significant effect takes place on the volatility of underlying stocks. Although the evidence is in sharp contrast to the so-called “established view”, it is consistent with recent studies.Option listing;derivatives;stock price;stock volatility

The Usefulness of the Most Widely Reported Dutch Financial Statement Numbers to Stock Market Investors

Much of the literature on the usefulness of company financial statement information focuses on the United States and the United Kingdom. But, these two countries are characterized by similar and rigid regulatory and enforcement regime. This study provides direct evidence from the Netherlands – a country with liberal financial reporting environment and different corporate governance regime. It empirically examines the information content of annual and semi-annual earnings announcements and the long-term association between stock returns and some widely reported financial statement variables. The evidence suggests that earnings and dividends disclosures made by Dutch companies are useful to stock market investors and the extent of the usefulness is not that modest as often perceived. However, the Dutch practice of reporting accounting cash flows as a summary performance measure does not have significant incremental usefulness.Financial reporting;capital market;information content;earnings response;value relevance

Insider trading restrictions and the stock market

Stock Markets;monetary economics

Can the Stock Market anticipate Future Operating Performance? Evidence from Equity Rights Issues

This paper examines whether the stock market valuation impact of rights issues is consistent with subsequent operating performance of issuing firms. Analysing a sample of rights issues in the Netherlands, we find that a significant stock price decline takes place with the announcement of rights issues. We then analyse post-rights issue operating performance and find that, consistent with the decline in stock price during the announcement period, issuing firms also exhibit a significant decline in their operating performance. Our analysis thus demonstrates that the stock market can successfully anticipate future changes in operating performance of firms.equity offerings;rights issues;valuation effect;firm performance

Share price and trading volume behaviour around trading suspensions

Share price and trading volume behaviour around trading suspension

The Usefulness of the Most Widely Reported Dutch Financial Statement Numbers to Stock Market Investors

Much of the literature on the usefulness of company financial statement information focuses on the United States and the United Kingdom. But, these two countries are characterized by similar and rigid regulatory and enforcement regime. This study provides direct evidence from the Netherlands – a country with liberal financial reporting environment and different corporate governance regime. It empirically examines the information content of annual and semi-annual earnings announcements and the long-term association between stock returns and some widely reported financial statement variables. The evidence suggests that earnings and dividends disclosures made by Dutch companies are useful to stock market investors and the extent of the usefulness is not that modest as often perceived. However, the Dutch practice of reporting accounting cash flows as a summary performance measure does not have significant incremental usefulness.

New Evidence on Price and Volatility Effects of Stock Option Introductions

This paper adds to the literature dealing with the effect of derivatives trading on underlying securities by examining option listings from the Netherlands. The effects on both stock returns and volatility are investigated using three types of samples, namely, listing of call options alone, simultaneous listings of both call and put options, and listings of put options alone. A significant decline in stock price is observed with the introduction of option trading. But, no significant effect takes place on the volatility of underlying stocks. Although the evidence is in sharp contrast to the so-called “established view”, it is consistent with recent studies.