Frozen Charters Hirst, Scott
Yale journal on regulation,
01/2017, Letnik:
34, Številka:
1
Journal Article
In 2012, the New York Stock Exchange changed its policies to prevent brokers from voting shares on corporate governance proposals when they have not received instructions from beneficial owners. ...Although the change was intended to protect investors and improve corporate governance, it has had the opposite effect: a significant number of U.S. public companies are no longer able to amend important parts of their corporate charters, despite the support of their boards of directors and overwhelming majorities of shareholders. Their charters are frozen. This Article provides the first empirical and policy analysis of the broker voting change and its significant unintended consequences. 1 provide empirical evidence that the broker voting change has resulted in the failure of more than fifty charter amendments at U.S. public companies, despite board approval and overwhelming shareholder support, and that hundreds more companies have frozen charters as a result of the change. The rule change has also made it more difficult to amend corporate bylaws and given some insiders a de-facto veto in proxy voting contests. These costs substantially outweigh the negligible benefits of the broker voting change. I compare a number of solutions to address these problems and identify several that would be preferable to the current approach.
This paper aims at providing empirical support to claims made by officials in oil-producing countries that investors in the New York Stock Exchange market are involved in the disruption of oil ...production in some OPEC countries. The claims state that some investors in the NYSE are financing militias in those countries to close down oilfields and ports, and buy oil before this incident occurs. By doing so, they have access to information that no one else in the market has, and make profits from this information. Using a VAR model approach to detect this phenomenon, and being inspired by the asymmetric information theory, we fail to support those claims. We tried to put this theory under investigation by running test on three oil-disruption incidents that occurred in 2013, and all of the results turned out to be insignificant. Nevertheless, this approach was able to detect a period which might involve asymmetric information in the NYSE. In addition, using a VAR model enabled us to measure the duration and magnitude of the effect of a shock in volumes of trade on oil prices in that market.
Purpose: This study examines how, and to what extent the trading of the cross-listed China-backed ADRs on the New York Stock Exchange (NYSE) contributes to the information flow and price discovery ...for the corresponding cross-listed stocks on the Shanghai Stock exchange (SSE). Design/methodology/approach: The study utilizes the information share, Granger causality test, Vector error correction model, Permanent-Temporary Gonzalo-Granger (PT/GG) method and Bivariate DCC-EGARCH model to examine the price discovery dynamics across the cross-listed stocks. Findings: The Granger causality tests show that there is two-way transmission on feedback between the Chinese and US markets. The effects from NYSE to SSE are larger than the other way round. The Bivariate DCC-EGARCH model test results indicate the volatility spill over from NYSE is larger from the SSE. Practical implications: Results suggest that in contrast to previous studies that showed very little contribution to price discovery by Chinese ADRs on the NYSE, the present study indicates that the contribution to price-discovery of Chinese ADRs on NYSE has increased relative to the past, suggesting the importance of changing time frames and economic situations. Originality/value: The study differentiates between long-term and short-term price discovery effects and finds that home country bias persists in the long term and in the short term the information from the Cross-listed China-backed ADRs on the New York Stock Exchange (NYSE) affects price discovery for SSE stocks.
The efficiency, safety, and soundness of financial markets depend on the operation of core infrastructure--exchanges, central counter-parties, and central securities depositories. How these ...institutions are governed critically affects their performance. Yet, despite their importance, there is little certainty, still less a global consensus, about their governance.Running the World's Marketsexamines how markets are, and should be, run.
Utilizing a wide variety of arguments and examples from throughout the world, Ruben Lee identifies and evaluates the similarities and differences between exchanges, central counter-parties, and central securities depositories. Drawing on knowledge and experience from various disciplines, including business, economics, finance, law, politics, and regulation, Lee employs a range of methodologies to tackle different goals. Conceptual analysis is used to examine theoretical issues, survey evidence to describe key aspects of how market infrastructure institutions are governed and regulated globally, and case studies to detail the particular situations and decisions at specific institutions. The combination of these approaches provides a unique and rich foundation for evaluating the complex issues raised.
Lee analyzes efficient forms of governance, how regulatory powers should be allocated, and whether regulatory intervention in governance is desirable. He presents guidelines for identifying the optimal governance model for any market infrastructure institution within the context of its specific environment.
Running the World's Marketsprovides a definitive and peerless reference for how to govern and regulate financial markets
Theory suggests that reputations allow nonanonymous markets to attenuate adverse selection in trading. We identify instances in which New York Stock Exchange (NYSE) stocks experience trading floor ...relocations. Although specialists follow the stocks to their new locations, most brokers do not. We find a discernable increase in liquidity costs around a stock's relocation that is larger for stocks with higher adverse selection and greater broker turnover. We also find that floor brokers relocating with the stock obtain lower trading costs than brokers not moving and brokers beginning trading post-move. Our results suggest that reputation plays an important role in the NYSE's liquidity provision process.
This study examines quotations, order routing, and trade execution costs for seven markets that compete for orders in large-capitalization NYSE-listed stocks. The competitiveness of quote updates ...from each market varies with measures of the profitability of attracting additional order and with volatility and inventory measures. The probability of a trade executing on each market increases when the market posts competitive quotes. Execution costs for non-NYSE trades when the local market posts competitive (non-competitive) quotes are virtually the same (substantially exceed) costs for matched NYSE trades. Collectively, these results imply a significant degree of quote-based competition for order flow and are consistent with off-NYSE liquidity providers using competitive quotations to signal when they are prepared to give better-than-normal trade executions.
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