Stock Exchanges and Issuers: A Changing Relationship

The nature of the relation between stock exchanges and firms seeking a listing has changed considerably over the past decades. In this paper, we argue that the relationship has lost most of its historic complexity and has almost been reduced to a standardized contract in the sense that there are few contractual properties distinguishing listing on different exchanges apart from granting access to a specific liquidity pool. Analyzing the actual specifications of listing agreements at five major stock exchanges, we demonstrate that the contractual features are converging towards a standardized agreement. Furthermore, we show that some of the functions formerly fulfilled by exchanges are now performed by other institutions. We analyze whether these changes are reflected by policy makers in their efforts to create integrated European capital markets.Die Beziehung zwischen Börsen und Eigenkapitalemittenten hat sich in den vergangenen Jahrzehnten fundamental verändert. In diesem Beitrag argumentieren wir, dass diese Beziehung einer standardisierten Vertragsbeziehung gleicht, die ihre historische Komplexität weitgehend verloren hat. Während Börsen in der Vergangenheit unterschiedlich gestaltete Listinganforderungen an Unternehmen gestellt und durchgesetzt haben, ist heute ihr wesentliches Differenzierungsmerkmal die Liquidität der gehandelten Aktien. Eine Untersuchung der Listinganforderungen von fünf bedeutenden Börsen zeigt, dass die wichtigsten Vertragsbestandteile des Abkommens zwischen Emmittent und Börse weitgehend vereinheitlicht sind. Wir zeigen weiterhin, dass neue Institutionen wie etwa nationale Börsenaufsichtsbehörden einige der früher von Börsen wahrgenommenen Aufgaben übernommen haben. Abschließend untersuchen wir, ob und in welchem Maße diese Veränderungen in den gegenwärtigen Bemühungen zur Schaffung integrierter europäischer Kapitalmärkte berücksichtigt werden

Neurology

Contains reports on six research projects.U. S. Public Health Service (B-3055-4, B-3090-4, MH-06175-02)U. S. Air Force (AF49(638)-1313)U.S. Navy. Office of Naval Research (Nonr-1841(70)

Does Geography Matter to Bondholders?

We find that the location of corporate headquarters significantly affects the firm’s bondholders. Similar to Loughran and Schultz (2006) and others, who show that investors are better able to obtain information on nearby companies, we look at firms located in large metropolitan cities, small cities, and rural areas and find that firms located in remote rural areas exhibit significantly higher costs of debt capital (of up to 65 basis points) in comparison to their urban counterparts. Unlike other studies that focus on the role of information asymmetries in the local bias of investors and decision makers, we are able to show that firms in remote areas experience greater costs of debt capital primarily because of a greater difficulty of monitoring their activities. We find that the adverse impact of bad corporate governance on bondholders is magnified in geographically remote firms, primarily because geographic distance reduces the effectiveness of external monitoring. Consistent with that, we show that in the private placement market, where firms are closely monitored by institutional investors, location plays no role in explaining the cross-sectional variation in the cost of debt capital across companies. We also find that the passage of the 2002 Sarbanes-Oxley Act, which brought about regulatory improvements in monitoring and governance, significantly reduced the agency costs of debt in rural firms. Taken together, our results indicate that the firm’s information environment interacts with the impact of corporate governance, particularly affecting the effectiveness of external monitoring in alleviating agency problems between insiders and debt holders

Bonding and the agency risk premium: An analysis of migrations between the AIM and the Official List of the London Stock Exchange

Firms that change their listing from the less regulated AIM to the more regulated main section of the London Stock Exchange exhibit positive abnormal returns on the announcement day. For firms moving in the opposite direction, both announcement and implementation day abnormal returns are negative. Following implementation, the pattern is reversed for both categories of firm. We show that differences in liquidity, conventional risk factors and in medium to long term firm survival rates between the two listing regimes do not explain the observed patterns of returns, suggesting that the answer lies in the different bonding requirements of the two market segments and an agency risk premium.JEL Codes: G12, G14, G15, G30, G32, G3

Divide and Privatize: Firms Break-Up and Performance

We analyze the long-term effects of divesture and ownership change on corporate performance. We employ a unique data set for a large number of Czech firms spanning the period 1996-2005. We employ a propensity score matching procedure to deal with endogeneity problems. Our results, which are generally in line with the positive effects of divestiture found in the developed-market literature, show that the initial effects of divestiture are positive but after a certain point they quickly diminish over time