Insider trading restrictions and the stock market: Evidence from the Amsterdam Stock Exchange\ud

This paper examines the effect of introducing insider trading restrictions on the behaviour of the Amsterdam Stock Exchange. From 1987 on, insiders are no longer allowed to trade two months before an annual earnings announcement. The results indicate that stocks became less liquid (when liquidity is measured by trading volume) when insiders were not allowed to trade. We also find some evidence that the introduction of insider trading restrictions reduced the stock market's speed of adjustment to positive earnings news.\ud \u

Takeover defenses, ownership structure and stock returns in the Netherlands: an empirical analysis

This study empirically examines the relationships between a firm’s takeover defenses and its ownership structure and stock returns. Analyzing data of Dutch listed companies, we find that multiple antitakeover defenses are increasingly adopted when firms are characterized by relatively lower ownership concentration. The evidence supports the hypothesis that more concentrated ownership of shares provides more effective monitoring of managers. As defense\ud by issuing preferred share has recently been the most widely adopted mechanism in the Netherlands, its impact on shareholders’ wealth is also analyzed. We observe the presence of two opposing effects of this antitakeover measur

Executive Compensation and the Cost of Debt

We examine how executive compensation affects the cost of debt financing. Analyzing CEO pay data from the UK, we find that debt-like and equity-like pay components have opposite effects on the cost of debt. An increase in defined benefit pensions is associated with lower bond yield spread, while an increase in executive stock options intensifies it. In addition, we find some evidence that cash bonus is negatively associated with the cost of borrowing. We do not observe any relation between restricted stock grants and the cost of debt financing. Our results suggest that bondholders are fully aware of both risk-taking and risk-avoiding incentives created by various executive pay components

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

This paper examines whether the stock market valuation impact is consistent with subsequent operating performance of firms. We use data for equity rights offerings - the widely adopted flotation method in the Netherlands. We first examine the stock market announcement effect of rights issues and observe that a statistically significant stock price decline takes place when companies announce rights issues. Further stock price decline is also observed during the subscription period. We then analyze post-rights issue operating performance of firms and find that, consistent with the announcement period decline in stock price, rights issuing firms subsequently exhibit a statistically significant decline in their operating performance. Additional investigation of both stock and operating performance decline provides full support for the information asymmetry hypothesis, partial support for the free cash flow hypothesis but no support for the window of opportunity hypothesis

Ownership and Control in the Netherlands

This paper analyses ownership and control structures of Dutch listed companies. Legislation effective since 1992 mandates all shareholders with holdings of 5 percent or more in Dutch companies to disclose their holdings. Our analysis shows that the average ownership stakes of the largest and the three largest shareholders are 27% and 41%, respectively. The average ownership stakes of banks, insurance companies and other financial institutions are relatively low. We observe that voting rights are more concentrated than ownership rights; the use of a supervisory board representing interests of different stakeholders is ubiquitous; and listed companies use different forms of antitakeover defence measures.Ownership, Control, Corporate governance

Transactional and Relational Approaches to Political Connections and the Cost of Debt

This paper highlights how debtholders value political connections. Specifically, it investigates whether lenders favor transactional connection as opposed to repeated relational connection. Tracing firms in a politically volatile emerging democracy, the paper confirms that firms with transactional political connection strategy experience a relatively lower cost of debt than those with relational strategy. The results are more pronounced for firms with high risk of financial distress