Investment Spending in the Netherlands: The Impact of Liquidity and Corporate Governance

This paper examines the relation between cash flow, corporate governance and fixed-investment spending. In perfect capital markets we expect no systematic relationship. However, Myers and Majluf's (1984) asymmetric information hypothesis and Jensen's (1986) managerial discretion hypothesis present imperfections and predict a positive impact of cash flow on investment in fixed assets. Aspects of corporate governance play an important role in both theories. We measure the impact of cash flow on investment for a set of Dutch firms and aim to distinguish between the asymmetric information hypothesis and the managerial discretion hypothesis. Our findings show that cash flow is an important determinant of investment expenditures. The impact of cash flow is largest for firms with low growth opportunities suggesting that the managerial discretion hypothesis is most at work in the Dutch setting. We also discern that the impact of governance characteristics on both investment and the cash flow-sensitivity of investment differ between firms having low and high growth opportunities. This implies that governance affects the managerial discretion and asymmetric information hypotheses differently.investment;corporate liquidity;cash flow;corporate governance

An Empirical Analysis of Legal Insider Trading in the Netherlands

In this paper, we employ a registry of legal insider trading for Dutch listed firms to investigate the information content of trades by corporate insiders. Using a standard event-study methodology, we examine short-term stock price behavior around trades. We find that purchases are followed by economically large abnormal returns. This result is strongest for purchases by top execu- tives and for small market capitalization firms, which is consistent with the hypothesis that legal insider trading is an important channel through which information flows to the market. We analyze also the impact of the implementation of the Market Abuse Directive (European Union Directive 2003/6/EC), which strengthens the existing regulation in the Netherlands. We show that the new regulation reduced the information content of sales by top executives.Insider trading;Financial market regulation

The Impact of Dark and Visible Fragmentation on Market Quality (Replaces CentER Discussion Paper 2011-051)

Two important characteristics of current European equity markets are rooted in changes in financial regulation (the Markets in Financial Instruments Directive). The regulation (i) allows new trading venues to emerge, generating a fragmented market place and (ii) allows for a substantial fraction of trading to take place in the dark, outside publicly displayed order books. This paper evaluates the impact on liquidity of fragmentation in visible order books and dark trading for a sample of 52 Dutch stocks. We consider global liquidity by consolidating the entire limit order books of all visible European trading venues, and local liquidity by considering the traditional market only. We find that fragmentation in visible order books improves global liquidity, but dark trading has a detrimental effect. In addition, local liquidity is lowered by fragmentation in visible order books.Market microstructure;Market fragmentation;Liquidity;MiFID

Investment Spending in the Netherlands:The Impact of Liquidity and Corporate Governance

This paper examines the relation between cash flow, corporate governance and fixed-investment spending. In perfect capital markets we expect no systematic relationship. However, Myers and Majluf's (1984) asymmetric information hypothesis and Jensen's (1986) managerial discretion hypothesis present imperfections and predict a positive impact of cash flow on investment in fixed assets. Aspects of corporate governance play an important role in both theories. We measure the impact of cash flow on investment for a set of Dutch firms and aim to distinguish between the asymmetric information hypothesis and the managerial discretion hypothesis. Our findings show that cash flow is an important determinant of investment expenditures. The impact of cash flow is largest for firms with low growth opportunities suggesting that the managerial discretion hypothesis is most at work in the Dutch setting. We also discern that the impact of governance characteristics on both investment and the cash flow-sensitivity of investment differ between firms having low and high growth opportunities. This implies that governance affects the managerial discretion and asymmetric information hypotheses differently.

My favorite editor anywhere

How can off-the-shelf editors be reused in applications that need mature editing support? We describe our editor multiplexer which enables interactive, application guided editing sessions using e.g. GNU Emacs and Vim. At a cost of less than 1 KLOC of editor specific glue code, both IDE builders and users benefit. Rapid integration of existing editors reduces application development cost, and users are not confronted with yet another foreign editor with its own learning curv

Generation of abstract programming interfaces from syntax definitions

Tree Manipulation; Using the ATerm-Library to represent tree-like data structures has become a popular activity, especially amongst developers of e.g. lexical scanners, parsers, rewrite engines and model checkers. Practical experience with the ATerm-Library in the ASF+SDF Meta-Environment has shown that the development and maintenance of tools that access ATerms using handcrafted code is involved and very error prone. Both the make and match paradigm and the direct manipulation of ATerms suffer from the fact that the programmer uses knowledge about the underlying structure (a.k.a. the signature) of the ATerm that represents the data type being accessed. Hard-wiring this knowledge in various tools makes it difficult to maintain the tools with respect to changes in the data structure. By lifting the data definition and its mapping to an ATerm representation away from the level of tool implementation, it becomes possible to generate a library of access functions on the data type, which can be used by all the tools that need access to it. The tools no longer directly manipulate the ATerm representation, but rather invoke methods described by the API of the library, thus abstracting from the fact that ATerms are used for the implementation of the data type. This paper describes how an API and its implementation can be generated from a syntax definition of the data type. In particular we describe how a grammar (in SDF) can be used to generate a library of access functions that manipulate the parse trees of terms over this syntax. Application of this technique in the ASF+SDF Meta-Environment has resulted in a spectacular elimination of 47 of the handwritten code, thus greatly improving both maintainability of the tools and their flexibility with respect to changes in the parse tree format

The Impact of Dark and Visible Fragmentation on Market Quality (Replaces CentER Discussion Paper 2011-051)

Two important characteristics of current European equity markets are rooted in changes in financial regulation (the Markets in Financial Instruments Directive). The regulation (i) allows new trading venues to emerge, generating a fragmented market place and (ii) allows for a substantial fraction of trading to take place in the dark, outside publicly displayed order books. This paper evaluates the impact on liquidity of fragmentation in visible order books and dark trading for a sample of 52 Dutch stocks. We consider global liquidity by consolidating the entire limit order books of all visible European trading venues, and local liquidity by considering the traditional market only. We find that fragmentation in visible order books improves global liquidity, but dark trading has a detrimental effect. In addition, local liquidity is lowered by fragmentation in visible order books.