Using a sample of 434 firms listed on U.S. capital markets, including Over-the-counter, and 356 domestically listed firms from 47 countries during 2010 to 2015, this research confirms corporate governance’s positive effect, as well as growth opportunities’ negative effect on firm’s dividend payout. Then, based on the proved relationship above, this research also finds support that cross-listing and Over-the-counter both strengthen the positive relationship between growth opportunities and dividend payout. Meanwhile, although cross-listed and Over-the-counter firms do have stronger corporate governance, no evidence is observed for their strengthening the negative effect of corporate governance on dividend payout.

Legal and Economic Aspects of Initial Public Offering (Neumahr, D.) Abstract This diploma thesis deals with initial public offering (IPO) of shares from both legal and economic perspective. The thesis is divided into three basic parts. The goal of the first part is to explain the process of IPO, its development and each institution related to the topic. Followed by part which is dedicated to legal framework in the European Union and each phase of the process is described from the viewpoint of Czech law. Second part aims to clarify basic economic advantages as well as disadvantages of initial public offering concerning the company and propose possible alternatives. Final part seeks to provide a case study of the process on the Czech and the American capital market. The purpose of my thesis was to explain what an initial public offering is, what are its upsides and downsides and describe in detail the whole process which companies have to undergo before they can publicly offer their shares and before they are admitted to the capital market. Throughout the thesis I examine the development of European law regarding IPO and I marginally try to compare it to American law. In the final case studies, concrete steps during the entire process are demonstrated on the examples of practice.

The thesis investigates the link between internal and external funds in financing new investment when asymmetric information is important. In both chapter, the entrepreneur has private information about the value of a project and, if the quality of the project is high, she tries to signal this to outside investors. The first chapter explores the tradeoff between using internal funds and raising external funds by issuing shares or bonds to finance a project. The entrepreneur can delay the project to accumulate internal funds over time from existing operations. This allows an entrepreneur with a high quality project to reduce her reliance on expensive underpriced bond or share issues. However, accumulating funds is also costly because of discounting and the risk that the project disappears. The more valuable the good project, the less the entrepreneur will delay the project, risking its loss, and so the more she relies on external financing. When external financing is sought, the entrepreneur decides to issue bonds or shares. The greater the value of the good project, the more underpriced shares are relative to bonds. Thus an entrepreneur with a highly valuable good project chooses equity and one with a less valuable project chooses debt. Combining the two results shows that for a highly valuable good project, debt is used, and for a less valuable project, internal funds are used. External equity gets squeezed out. Aggregate data for the U.S. confirm that corporate bond issues are a more important source of funds than new share issued. Furthermore, most small firms rely on internal funds and debt, rather than external equity to finance their projects. The second chapter provides a new theory for the underpricing of initial public offerings (IPOs). As in the first chapter, underpricing is used as a signal of quality. However, the entrepreneur is risk averse and only underprices when she cannot sell enough primary (new) shares to raise sufficient proceeds from the IPO to cover the cost of the project without diluting her position below that needed to signal a high project value. Underpricing allows the entrepreneur to maintain a high stake in the firm and still make a credible signal of quality. This allows more primary shares to be sold resulting in a net increase in proceeds. The model predicts that underpricing should be greatest among firms that don't sell secondary shares (shares held by insiders) at the IPO and that there should be a positive relationship between the firm's capital requirement and the initial return among this group of firms only. A switching regression framework is used. The probit model is first estimated where the probability of no secondary shares is explained by proxies for a firm's capital requirements. The initial return is then regressed on the same proxies, conditioning on whether the firm sells secondary shares or not and accounting for possible correlation between errors in the selection and regression equations. Strong support is found for the positive relationship between initial return and capital requirements for only firms without secondary share sales, as predicted. / Arts, Faculty of / Vancouver School of Economics / Graduate

The purpose of this paper is to investigate the impact of cross-listing on companies' performance. It is divided into two aspects, one in short-term and the other in long-term. In short-run study, 6 companies cross-listing in NYSE and Chinese market are in the sample. In pre-cross-listing period, the abnormal returns are mostly positive and remain stable; the cumulative abnormal returns are close to 0 and the difference among them is very small; but on the cross-listing day, all the companies' abnormal returns decline, and after that day, the abnormal returns still fluctuate around 0 while most of them are negative, and the difference among each company's cumulative abnormal return become large. In long-run study, by using multiple regression of 99 Chinese companies listed in th U.S. markets form 2007 to 2012, there is a significant positive relationship between total asset turnover and cross-listing at 5% significance level and there is a significantly negative relation between market value and cross-listing at 10%significance level; return on equity and return on asset are both positive with cross-llisting, but not significant.

The study investigates the relationship between the Johannesburg Stock Exchange Listing Status and performance of selected South African private Hospital Operators covering a 10- year period from 2008-2017. The selected proxies for the hospital performance measured were: Total Annual Revenue, Revenue per Bed per Day, Total Number of Hospital Beds, and EBITDA margin while controlling for Healthcare Inflation and Medically Insured Population, respectively. The specified regression equation was expanded to include simultaneous equations for the proxies of hospital performance. From this system of simultaneous equations, the study estimated the panel regression model using Seemingly Unrelated Regression (SUR). The findings showed that (1) JSE-listed Hospital Operators command higher Total Annual Revenues generated, superior Hospital Bed Numbers, and higher Revenue per Bed per Day compared to their unlisted peers, but their operating efficiency is not superior to that of their unlisted peers. In addition, the study found (2) a positive and statistically significant relationship between JSE Listing Status and Private Hospital Operator Performance for the performance proxies of Total Annual Revenue, Revenue per Bed per Day and Total Number of Hospital Beds, but a positive statistically insignificant relationship in respect of EBIDTA margin, the operating efficiency measure of performance; (3) a positive statistically significant relationship between Medically Insured Population and Private Hospital Operator Performance for the performance proxies of Total Annual Revenue, Revenue per Bed per Day, Total Number of Hospital Beds, but a positive statistically insignificant relationship in respect of the operating efficiency measure of performance; (4) a negative statistically insignificant relationship between Healthcare Inflation and Private Hospital Operator Performance for the performance proxies of Total Annual Revenue, Revenue per Bed per Day, Total Number of Hospital Beds, but a positive also statistically insignificant relationship in respect of the operating efficiency measure of performance. These results corroborate the theoretical predictions and are supported by previous studies. The study has important implications for public bourse listing as a strategic organisational consideration in terms of funding mobilisation for corporate performance and growth strategy. The sizeable macroeconomic contribution of the private hospital sector, and the importance of the medical insurance-private hospital performance nexus, behoves policy makers to ensure that the proposed universal health fund in South Africa must not totally crowd out the development of private health insurance.

Syftet med studien är att undersöka varför företag väljer att notera sig genom ett omvänt förvärv. Vi vill ta reda på vilka för- och nackdelar det finns med den här processen, och ifall den verkligen är mindre kostsam jämfört med en traditionell notering. Enligt tidigare teorier är ett omvänt förvärv oftast billigare och mindre tidskrävande än en vanlig notering vilket också målas upp som ett vanligt motiv till att noteras via ett omvänt förvärv. För att undersöka detta vidare har vi valt att inrikta oss mot rådgivare som hjälper sina kunder att navigera i börsklimatet. Rådgivarna vi har intervjuat har en bred erfarenhet av både vanlig notering, och omvänt förvärv. Studien visar att det huvudsakliga motivet till ett omvänt förvärv är att uppnå ägarspridning i bolaget, som i regel tenderar att vara väldigt kostsamt. Vidare finns det övriga fördelar i form av skattelättnader, infrastruktur och befintliga avtal. Undersökningen visar även att processen inte är helt riskfri då det kan uppstå anspråk mot företaget som kan innebära framtida kostnader. Kostnadernas omfattning tenderar att variera beroende på om det föreligger prospektkrav eller inte. Huruvida processen är mindre kostsam eller inte i jämförelse med en IPO går därmed inte att bevisa i undersökningen. / The purpose of this study is to investigate why companies choose to go public through a reverse merger. We aim to identify the advantages and disadvantages of this process and determine if it’s truly less costly compared to a traditional IPO. Based on prior research, a reverse merger is typically considered cheaper and less time-consuming than a regular IPO and is often cited as the main motivation for going public through this route. To examine this topic further, we’ve chosen to focus on advisors who assist their clients in navigating the stock market. The advisors we’ve interviewed possess extensive experience with both traditional IPOs and reverse mergers. The study indicates that the main motivation for a reverse merger is to achieve ownership dispersion in the company, which typically tends to be very costly. Furthermore, there are other benefits in the form of tax benefits, infrastructure, and existing agreements. The investigation also shows that the process is not entirely risk-free as there may be claims towards the company that could result in future costs. The extent of the costs tends to vary depending on whether there is a prospectus obligation or not. Therefore, whether the process is less expensive than an IPO or not cannot be proven in the study.

No description available.

This dissertation consists of three essays in applied financial economics. The unifying theme is the use of financial regulation as quasi-experiments to understand the interrelationship between derivatives and the underlying assets. The first two essays use different quasi-experimental econometric techniques to answer the same research question: how does option listing affect the return volatility of the underlying stock? This question is difficult to answer empirically because being listed on an options exchange is not random. Volatility is one of the dimensions along which the options exchanges make their listing decisions. This selection bias confounds any causal effect that option listing may have. What is more, the options exchanges may list along unobservable dimensions. Such omitted variable bias can also confound any causal effect of option listing. My first essay overcomes these two biases by exploiting the exogenous variation in option listing that is created by the SEC-imposed option listing standards. Specifically, the SEC mandates that a stock must meet certain criteria in the underlying market before it can trade on an options exchange. For example, a stock needs to trade a total of 2.4 million shares over the previous 12 months before it can be listed. Since 2.4 million is an arbitrary number, stocks that are “just above” the 2.4 million threshold will be identical to stocks that are “just below” it, the sole difference being their probability of option listing. Accordingly, I use the 2.4 million threshold as an instrument for option listing in a fuzzy regression discontinuity design. I find that option listing causes a modest decrease in underlying volatility, a result that corroborates many previous empirical studies. My second essay attempts to estimate the effect of option listing for stocks that are “far away from” the 2.4 million threshold. I overcome the aforementioned omitted variable bias by fully exploiting the panel nature of the data. I control for the unobserved heterogeneity across stocks by implementing a two-way fixed effects model. Unlike most previous studies, I control for individual-level fixed effects at the firm level rather than at the industry level. My results show that option listing is associated with a decrease in volatility. Importantly, these results are only statistically significant in a model with firm-level fixed effects; they are insignificant with industry-level fixed effects. My third essay is a policy evaluation of the SEC’s Penny Pilot Program, a mandated decrease of the option tick size for various equity options classes. Several financial professionals claimed that this decrease would drive institutional investors out of the exchange-traded options market, channeling them into the opaque, over-the-counter (OTC) options market. I empirically test an implication of this hypothesis: if institutional investors have fled the exchange-traded options market for the OTC market, then it may take longer for information to be impounded into a stock’s price. Using the `price delay’ measure of Hou and Moskowitz (2005), I test whether stocks become less price efficient as a result of being included in the Penny Pilot Program. I perform this test using firm-level fixed effects on all classes that were included in the program. I confirm these results with synthetic control experiments for the classes included in Phase I of the Penny Pilot Program. Generally, I find no change in price efficiency of the underlying stocks, which suggests that the decrease in option tick size did not materially erode the price discovery that takes place in the exchange-traded equity options market. I also find evidence that the decrease in option tick size caused an increase in short selling for the piloted stocks. / Economics

We re-examine the determinants of institutional ownership (IO) from a segmentation perspective -- i.e. accounting for a hypothesized systematic exclusion of stocks that cause high implementation or agency costs. Incorporating segmentation effects substantially improves both explained variance in IO and model parsimony (essentially requiring just one input: market capitalization). Our evidence clearly establishes a role for both implementation costs and agency considerations in explaining segmentation effects. Implementation costs bind for larger, less diversified, and higher turnover institutions. Agency costs bind for smaller institutions and clienteles sensitive to fiduciary diligence. Agency concerns dominate; characteristics relating to the agency hypothesis have far more explanatory power in identifying the cross-section of segmentation effects than characteristics relating to the implementation hypothesis. Importantly, our study finds evidence for interior optimum with respect to the institution's scale, due to the counteracting effect between implementation and agency frictions. We then explore three implications of segmentation for the equity market. First, a mass exodus of publicly listed stocks predicted to fall outside institutions' investable universe helps explain the listing puzzle. There has been no comparable exit by institutionally investable stocks. Second, institutional segmentation can lead to narrow investment opportunity sets, which limit money managers' ability to take advantage of profitable opportunities outside their investment segment. In this respect, we construct pricing factors that are feasible (ex-ante) for institutions and benchmark their performance. We find evidence consistent with the demand-based asset pricing view. Specifically, IO return factors yield higher return premia and worsened institutional performance relative to standard benchmarks in an expanding institutional setting (pre-millennium). Third, we use our logistic model and examine the effect of aggregated segmentation on the institutions' portfolio returns. Our findings suggest that investment constraints cut profitable opportunities and restrict institutions from generating alpha. In addition, we find that stocks with abnormal institutional ownership generate significant positive returns, suggesting institution actions are informed. / Doctor of Philosophy / We demonstrate that implementation and agency frictions restrict professional money managers from ownership of particular stocks. We characterize this systematic exclusion of stocks as segmentation and show that a specification that accommodates the segmentation effect substantially improves the empirical fit of institutional demand. The adjusted R-squared increases substantially; the residuals are better behaved, and the dimensionality of institutions' demands for stock characteristics reduces from a list of 8-10 standard characteristics (e.g., market cap, liquidity, index membership, volatility, beta) to just one: a stock's market capitalization. Our evidence identifies a prominent role for both implementation costs and agency costs as determinants of institutional segmentation. Implementation costs bind for larger, less diversified, and higher turnover institutions. Agency costs bind for smaller institutions and clienteles sensitive to fiduciary diligence. In fact, we find that segmentation arises from a trade-off between implementation costs (which bind for larger institutions) and agency considerations (which bind for smaller institutions). Agency concerns dominate; characteristics relating to the agency hypothesis have far more explanatory power in identifying the cross-section of segmentation effects than characteristics relating to the implementation hypothesis. More importantly, we find evidence for interior optimum with respect to the institution's scale, due to the counteracting effect between implementation and agency frictions. This conclusion is important to considerations of scale economies/diseconomies in investment management. The agency story goes in the opposite direction to the conventional wisdom underlying scale arguments. We then explore three implications of segmentation for the equity market. First, our evidence suggests that institutional segmentation coupled with growing institutional dominance in public equity markets may have had a truncating effect on the universe of listed stocks. Stocks predicted to fall outside of institutions' investable universe were common prior to the 1990s, but are now almost nonexistent. By contrast, stocks predicted to fall within institutions' investable universe have not declined over time. Second, institutional segmentation can lead to narrow investment opportunity sets, which limit money managers' ability to take advantage of profitable opportunities outside their investment segment. In this respect, we construct pricing factors that are feasible (ex-ante) for institutions and benchmark their performance. We find evidence consistent with the demand-based asset pricing view. Specifically, feasible return factors yield higher return premia and worsened institutional performance relative to standard benchmarks in an expanding institutional setting (pre-millennium). Third, we use logistic specification and examine the effect of aggregated segmentation on the institutions' portfolio returns. Our findings suggest that investment constraints cut profitable opportunities and restrict institutions from generating alpha. In addition, we find that stocks with high (low) abnormal institutional ownership generate significant positive (negative) returns, suggesting institution actions are informed.

No / Aims: An increasing dialysis population and insufficient supply of transplant organs necessitate that patients are carefully evaluated prior to registration on the national waiting list to ensure effective utilization of a scarce resource. We have assessed listing practice in two renal units within the North of England Transplant Alliance. Methods: Demographic, ethnic and clinical data were recorded at initiation of dialysis for patients from two northern English cities, Bradford (n = 209) and Hull (n = 202) between 1994 ¿ 2000. Patients were stratified by two co-morbidity scoring systems. Multivariate and survival analyses were undertaken by registration status. Results: Overall, 159 patients were registered onto the waiting list. Stratification by co-morbidity predicted listing at high and low risk, but with overlap at medium scores. There was no difference in overall co-morbid burden between the two centers (p = 0.161 and 0.316, respectively, for two scoring systems). Logistic regression analysis demonstrated a center effect, Hull having an odds ratio for listing of 0.48 compared to Bradford (p = 0.041). Short- and medium-term survival in the listed group was high regardless of co-morbid score (22 vs 174 deaths in the non-listed group). In this cohort, five patients died with grafts, another three died whilst active on the waiting list. The remaining 14 patients had been removed from the list prior to death. Summary: Co-morbidity scoring schemes are unlikely to be sophisticated enough to accurately identify those who would most benefit from transplantation, and the value of clinical judgment is well-shown in this study. Standardization of registration will result in more equitable allocation of organs. However, this study has demonstrated that there are differences in listing practices even within a single alliance. Continuous assessment will allow judicious removal from the waiting list of patients who have developed an unacceptable co-morbid burden.