Share Issuance Research Articles

An Atypical Joint Stock Company under Turkish Law: Basic (Atypical) Principles in the Establishment and Share Issuance of Investment Companies with Variable Capital

An Atypical Joint Stock Company under Turkish Law: Basic (Atypical) Principles in the Establishment and Share Issuance of Investment Companies with Variable Capital

Current paradigm of corporate governance and determinants of share issuance by Mexican companies

This research analyzed the issuance of shares by all Mexican companies that were listed on the Mexican Stock Exchange (MSE) during the 2012–2022 period to determine if they continue to maintain the paradigm of corporate control through ownership of the highest percentage of shares among family members and their close circles. Additionally, the extent to which the variables of company age, sales level, and business sector are determinants of using the issuance of shares as a source of financing was evaluated. The methodology applied included a comprehensive analysis of the percentage of issuance of new shares, a Pearson’s correlational analysis, a simple linear regression, a linear binomial analysis, and the ANOVA model. The results showed that although a few MSE companies have begun to issue shares, the level of issuance is still lower and does not constitute evidence of a paradigm change. Concerning the variables of age, sales, and business sector, it was found that there is insufficient evidence that these variables are determinants of MSE companies that issue shares as a financing method.

Pengaruh Right Issue Terhadap Harga Saham Pada Perbankan Yang Terdaftar Di Bei Periode 2021-2023

A right issue is a business activity that has the potential to impact the quantity and value of shares available on the market and contains crucial information that shareholders may utilize to increase their earnings in the future. Since the market may respond to the rights issue announcement, the information contained in the announcement becomes significant. A right issue is a current share issuance in which the company grants its existing shareholders the right to purchase new shares. Each existing shareholder is given the option to purchase a number of new shares from the company at a predetermined price and time. The purpose of this research is to examining variations in the stock price before and after the right issue. This study was carried out on financial institutions that are listed on the Indonesia Stock Exchange between 2021-2023 period. Event research is often used to test the information content of an event, such as the notification of the rights problem. The sampling method using the purposive sampling method. 26 banking companiess were chosen as examples based on the predefined criteria. Secondary data from Yahoo Finance is the kind of data that was used. 2021-2023, daily stock price data from Indonesia Stock Exchange website . The Wilcoxon Signed Rank Test is used in the data analysis procedure by using the Eviews 12 program. The outcomes demonstrated that the outcomes yielded values of 0,0986; 0,4429; 0,1925; 0,0999. As a result, the analysis suggests that the price of the shares did not significantly change before or after the rights issuance.

An Examination of Preference Share Issuance by Companies Listed on the Malta Stock Exchange

An Examination of Preference Share Issuance by Companies Listed on the Malta Stock Exchange

Bank of Baroda vs. Aban Off-Shore Limited

The Companies Act 2013 is a comprehensive legislation that governs the formation, functioning, and regulation of companies in India. It replaced the Companies Act of 1956 and brought significant changes and reforms to corporate governance, investor protection, and ease of improving corporate governance standards, enhancing shareholder rights, and strengthening and aligning the corporate legal framework with international best practices, ensuring transparency, accountability, and responsible business conduct. It introduced several new provisions and amendments to improve corporate governance standards, enhance shareholder rights, and strengthen regulatory oversight. Preference shares, also known as preferred shares or preference stock, are a class of shares issued by a company that carries certain preferential rights and privileges over common shares. They represent an ownership interest in a company but have specific features that distinguish them from ordinary shares. Preference shares provide a balance between equity and debt instruments, as they offer certain fixed-income characteristics while still being considered part of the company's equity capital. The specific rights and features of preference shares may vary depending on the company and the terms specified in the share issuance documents.

Impact of the Covid-19 Pandemic on the Situation and Financial Results of the Ekstraklasa Football Clubs

The objective of this study is to evaluate and compare the financial situation and results of 12 joint-stock companies running football clubs in the Polish Ekstraklasa during two periods of their activity. The first period was during the COVID-19 pandemic in Poland, and the second period was before the pandemic. The pandemic period covered two years (2020 and 2021), and the pre-pandemic period was 2019. The description of the financial situation was based on an evaluation of net income from sales, net financial results and equity, as well as liquidity ratios and debt. Deviations in the form of absolute differences were calculated to compare the two study periods, where the pre-pandemic ratios for 2019 were subtracted from the financial ratios for the COVID-10 pandemic period (2020 and 2021). The study shows that the financial situation during the two periods varied, and it cannot be clearly stated that the financial situation deteriorated during the pandemic. Despite lower revenue from the matchday, which was caused by reduced numbers of fans at stadiums, higher net income was noted in most clubs during the pandemic. This was a consequence of higher revenues from broadcast rights and sponsoring and advertising activities. Higher-income and revenue from recapitalisation by share issuance, supplementing equity and shareholder loans ensured the clubs’ financial liquidity during the pandemic. The clubs also maintained their liquidity owing to the financial resources received from the Polish government as part of the Anti-Crisis Shield. The clubs’ financial situation regarding equity deteriorated during the pandemic, as it decreased in most clubs. This was caused by higher negative financial results than before the pandemic. High losses, especially among the clubs which reported negative results before the pandemic, resulted in a further increase in negative equity.

The anatomy of a bubble company: The London Assurance in 1720

AbstractThe London Assurance Company (LA), which incorporated during the bubble of 1720, experienced more dramatic price movements in its shares than the South Sea Company. This paper examines how incorporating during the bubble affected its long run performance. We show that the bubble in the Company's share price was partly attributable to changes in market structure during the share issuance process. As a result of the bubble, the Company's original subscribers, who had been curated for expertise and political connections, overwhelmingly exited during 1720 and were replaced by unsuccessful speculators. Analysis of LA shareholder behaviour up to 1737 suggests that this loss of shareholder expertise had detrimental consequences for the Company's performance. These results demonstrate how a bubble in the shares of a newly created company can lead to an exodus of value‐adding investors, damaging the company's long‐term prospects.

Authorisations to issue shares and disapply pre-emption rights in the UK, Belgium and France: law, economics and practice

ABSTRACT In this paper, I analyse the role of shareholder approval and pre-emption rights in protecting shareholders in share issuances by listed corporations in the UK, Belgium and France. In these countries, shareholder approval and pre-emption rights are in principle required for share issuances, but the general meeting can authorise the board of directors to issue shares and disapply pre-emption rights. Proxy advisors and institutional investors have adopted guidelines that signal that they strongly support pre-emption rights and shareholder approval of share issuances. However, I provide empirical evidence that these guidelines are often not followed in France and Belgium, especially for smaller corporations with high levels of insider ownership. I contrast this with the strong impact of the guidelines in the UK. I also offer explanations for these differences, as well as policy options that would give shareholders a larger say on the balance between flexibility and accountability regarding authorisations.

The Factor and Sustainability Characteristics of Share Issuance

The Factor and Sustainability Characteristics of Share Issuance

A Closer Look at the Effects of Equity Market Liberalization in Emerging Markets

Abstract Earlier studies have linked equity market liberalization to growth in emerging markets. Some conclude liberalization causes growth, whereas others contend contemporaneous economic policies and conditions play important roles. The causal argument contends that foreigner investability in public firms leads to lower discount rates and greater share issuance, investment, and efficiency. Using three separate measures of foreign investability, we do not find these effects. Moreover, common de jure foreigner-investability measures are poor de facto measures. Economic indicators, not directly influenced by equity market liberalization, also grow faster in countries with more investable firms. Our findings suggest foreigner investability cannot fully explain the equity-market-liberalization-growth relation. (JEL F30, F38, G30, G24, G15)

Investment and access to external finance in Europe: Does analyst coverage matter?

We aim to determine whether analyst coverage improves European firms’ access to capital markets and investment. Based on a data set that includes firms from several European countries between 2000 and 2015, we implement a treatment effect framework and an instrumental variables (IV) approach, in which the intensity of industry-level waves in coverage is used as an instrument for firm-level coverage. We show that analyst coverage is favorable to firms’ debt and share issuance and their investment expenses. Our paper emphasizes the key role of financial analysts in improving European firms’ financial conditions.

Liquidez em caixa e as restrições financeiras no desempenho de mercado das empresas brasileiras

ABSTRACT This article aimed to verify the influence of cash liquidity and financial constraints on the market performance of Brazilian companies. According to pecking order theory, organizations choose retained earnings over debts or new share issuances, which may be linked to specific costs. However, trade-off theory highlights that taxes mean that financial policy and debt can be relevant to company value. Thus, this study aims to provide new insights on these topics and knowledge for investigating cash liquidity and financial constraints in relation to performance. The cash liquidity of organizations and financial constraints are important phenomena for performance, given that, in this study, there was an increase in performance. The results suggest that organizations choose to underinvest in the setting due to the difficulty of obtaining credit. Thus, there is an evident need for organizations to present liquidity so as not to lose investment opportunities. Despite the financial constraints, the organizations represent, to some extent, a good investment option, as they prefer excess cash to resources for new investments. The population of this study is formed of companies listed on the B3 S.A. -Brasil, Bolsa, Balcão. The analysis period corresponded to the years from 2014 to 2018 and the KZ index is calculated to classify the organizations regarding their level of constraint. Next, multiple linear regression was run, controlling for year and sector fixed effects. There is a need for organizations to present liquidity to attract new investors. However, companies that find themselves financially constrained can also represent a good investment option as they choose excess cash. In the market, there are some resistances regarding financially constrained organizations, but there may be considerable liquidity in them.

PECULIARITIES OF THE FINANCIAL MANAGEMENT OF JOINT STOCK COMPANIES

The joint-stock form of business organization is one of the common forms of the functioning of economic companies in modern economic development conditions, which, in turn, is associated with the processes of privatization, corporatization, and its numerous advantages. The peculiarities of the economic and legal basis of the functioning of domestic JSCs are defined in the Law of Ukraine «On Joint-Stock Companies», according to which they are divided into private and public. The article defines the advantages and disadvantages of the functioning of domestic JSCs, as well as the differences between their types. The article states that JSCs play a vital role in the country's economy, which is due to the fact that this type of business entity forms the largest share of Ukraine's GDP, as well as a significant part of the State budget's revenues. Besides, it also positively affects the technological and innovative development of economic processes. Based on the analysis, the authors came to the conclusion that for the period of 2017-2021, there was a decrease in the number of joint-stock companies by 7,509 units or by 51%. The share of JSCs in the total number of legal entities of Ukraine is insignificant and gradually decreases from 1,19% in 2017 to 0,5% in 2021. There is a prevalence of private joint-stock companies in the structure of JSC types, which is associated with the peculiarities of the development of the domestic corporate sector. During the period of analysis of the activities of joint-stock companies, the volume of share issuance and the number of their issues decreased. The article states that the efficiency of JSCs activities largely depends on the quality of the financial management organization. Having studied various interpretations of the essence of the concept of «financial management», the authors provided their own definitions. The article characterizes components of organizational support for the financial management of a joint-stock company, namely: purpose, tasks, principles, and functions. Apart from that, the authors also highlighted the financial management information support system, which serves as the basis for evaluating the efficiency of JSC's financial resources management. In order to develop sound management decisions in the financial management system of JSC, it is advisable to use a set of groups of indicators of JSC's financial condition, which make it possible to focus on the strengths of financial and economic activity and identify problematic issues of the functioning of companies. The results of the conducted financial analysis should be applied both in current activities and in the exploitation of strategic development directions.

Pre-Emption Rights and Shareholder Approval of Share Issuances in Europe: An Accountability Gap?

Pre-Emption Rights and Shareholder Approval of Share Issuances in Europe: An Accountability Gap?

Exploiting the persistence in managerial market timing

Some firms time their share issuances/repurchases using their private information while others do not. We identify successful timers by comparing a cash-flow-based measure of net share issuance (NSI) with a share-based measure. Recent successful timers—only a small fraction (23%)—drive the known return predictability of NSI in the following year. The evidence suggests that the stock market underreacts to the persistence of managerial market-timing, providing significant opportunities for investors to mimic successful market-timing in their investment strategies. A value-weighted NSI hedge portfolio formed only on recent successful timers earns a six-factor alpha of 11.8% a year after transaction costs.

Decomposing the earnings-to-price ratio and the cross-section of international equity-index returns

ABSTRACT We examine whether components of the earnings-to-price (EP) ratio can be used to extract incremental information to better estimate future returns in the cross-section of country-industry indexes. We demonstrate that the EP components, such as lagged EP, changes in earnings, short-term momentum and long-term reversal in prices increase the accuracy of return forecasts. The EP decomposition matters in developed markets but is pointless in emerging countries. The results are robust to modifications in the methodology, sub-period analyses, the use of an alternative sample and remain unchanged after controlling for net share issuance, size, and fixed country and time effects.

Stock Price Management and Share Issuance: Evidence from Equity Warrants

ABSTRACTWe investigate whether firms manage stock prices in anticipation of share issuance. Warrant exercise results in share issuance and warrant expiration dates are fixed years in advance, which precludes market timing. We predict firms manage stock prices to prevent (induce) warrant exercise when exercise is dilutive (anti-dilutive) to existing shareholders. To test our prediction, we examine stock returns around warrant expiration dates. We find that the difference between out-of-the-money (OTM) and in-the-money (ITM) firms' return patterns (i.e., post-expiration minus pre-expiration returns) is positive, and OTM (ITM) firms' return pattern is positive (negative). Return patterns of three sets of pseudo warrant firms differ from patterns of warrant firms. Return patterns are stronger when more feasible price changes are required to affect warrant expiration status, and firm-issued news items is a mechanism for price management. Thus, our findings provide evidence that firms engage in stock price management in anticipation of share issuance.JEL Classifications: G14; G15; G32; M41.

How national culture affects IPO decisions? Evidence from Europe and Asia

Purpose The purpose of this paper is to investigate which cross-country characteristics influence the going-public decisions and how the cultural values of the countries affect initial public offering (IPO) firms’ profitability and risk of financial distress. Design/methodology/approach Using a sample of privately held and firms that went public on the European and Asian Stock Exchanges between 2007 and 2011, this paper applies probit model and ordinary least squares regression to examine which cross-country characteristics could affect the decision to go public and how cultural values affect the profitability and risk of IPO firms.[AQ1] In addition, to overcome multicollinearity concerns caused by the use of Global Leadership and Organizational Behavioural Effectiveness culture dimensions, this paper factor analyses the dimensions using principal component analysis. Findings The results are as follows. First, this paper finds that firms in tradition-oriented countries are less likely to go public, while firms in result-oriented countries are more likely to hold an IPO. Second, this paper finds that country characteristics (i.e. financial deepening and taxation) affect the going-public decision. Third, this paper documents that IPO firms in traditionally and result-oriented countries have positive profitability and less risk of financial distress. Practical implications This study is intended for all those European and Asian policymakers and managers who want to improve their knowledge about what different indicators can establish the decision of firms that going-public facing different stages of their lifecycle. Specifically, policymakers wishing to promote IPO-activity in their countries may find it useful to strengthen the set of formal-institutions both to reduce corporate-taxation and to reduce the uncertainty associated with first-time share issuance and investment in such initiatives. This study is also intended for managers of companies that are not yet publicly-traded on their national stock-markets to be helpful to their decision-making processes. Originality/value This paper aims to extend the growing literature on the effects of cross-country factors on economic decision-making in finance and particularly adds to research that investigates the influence of these factors on the IPO decision of European and Asian firms.

Return range and the cross-section of expected index returns in international stock markets

<abstract> This study examines the cross-sectional relation between return range and future returns for the first time in literature. We show that the return range can serve as a very practical measure of total volatility instead of standard deviation due to the range's high correlation with standard deviation and strong predictive ability. Range, standard deviation, and idiosyncratic volatility are cross-sectionally linked to future returns on indexes of small size, while earnings-to-price ratio and net share issuance predict returns of mid-cap and large-cap indexes, respectively. Maximum and minimum return effects along with the momentum effect are prevalent in returns of indexes of any size but stronger for small-cap indexes. </abstract>

Bank of Japan Equity Purchases: The (Non-)Effects of Extreme Quantitative Easing*

Abstract From January 2011 through March 2018, the Bank of Japan purchased equity index exchange-traded funds (ETFs) worth about 3.5% of GDP. Identification of the effect of central bank ETF purchases on stock valuations and corporate responses is via differently-weighted and changing stock indices. BOJ purchases lift valuations, increase share issuances, and increase total assets. On average, the latter increase is due to cash and short-term securities rather than capital investment. However, firms with worse corporate governance do increase capital investment. These findings suggest central bank equity purchases are a problematic tool for stimulating economic growth through high broad-based private-sector corporate investment.