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Delivery failure close-out
Title
Delivery failure close-out: an event study on the effects of newly adopted regulation SHO amendments.
Creator
Scherle, Richard., Harriet L. Wilkes Honors College
Abstract/Description
A generally illegal form of short selling in United States equity markets, called "naked shorting," occurs when a seller of stock sells shares that do not exist. This type of short selling has negative consequences that result from the tactic's ability to be used as a tool to artificially inflate an issuer's stock supply, which introduces significant harm to the integrity of the market's natural forces of supply and demand. Newly adopted amendments to the Securities and Exchange Commission's...
Show moreA generally illegal form of short selling in United States equity markets, called "naked shorting," occurs when a seller of stock sells shares that do not exist. This type of short selling has negative consequences that result from the tactic's ability to be used as a tool to artificially inflate an issuer's stock supply, which introduces significant harm to the integrity of the market's natural forces of supply and demand. Newly adopted amendments to the Securities and Exchange Commission's short sale governance regulation, called Regulation SHO, required the mandatory purchasing of shares by certain market participants in order for those participants to close-out previously excused delivery failures, called "grandfathered" failures. This study examines the consequences of this new regulation, in terms of share price and volume, for those few securities that had the most persistent delivery failure problems. Because the regulation mandates the purchase of shares by certain influential market participants, I examine if the stock markets of these securities exhibited unusual volatility which may be indicative of the market maker trying to cover at low cost. Using technical analysis techniques, such as volume surge detection (using moving volume averages), the performance of the target securities will be compared with appropriate benchmark indices for the purpose of detecting unusual activity. Unusual activity may be consistent with my hypothesis that market makers may encourage additional volatility to cause liquidity problems for marginal investors which forces them to sell part or all of their position. As discussed in great detail, the extra marginal shares injected into the market by the action of forced selling by these marginal investors may be used by the market makers to lower their cost of regulation compliance.
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Date Issued
2008
PURL
http://purl.flvc.org/FAU/210002
Subject Headings
Securities industry, Investment analysis, Short selling, Capitalism, Moral and ethical aspects
Format
Document (PDF)
Large shareholder heterogeneity
Title
Large shareholder heterogeneity: the effect on firms' accounting quality and information asymmetry.
Creator
Trainor, Joseph E., College of Business, School of Accounting
Abstract/Description
I investigate the association between large shareholder heterogeneity and firms' accounting quality and information asymmetry. Specifically, I construct three measures of ownership heterogeneity based on the type, size, and monitoring aggressiveness of large shareholders present in a firm. Applying these three measures of heterogeneity, I examine whether large shareholder heterogeneity is associated with the variation in firms' accounting quality and information asymmetry. I also examine new...
Show moreI investigate the association between large shareholder heterogeneity and firms' accounting quality and information asymmetry. Specifically, I construct three measures of ownership heterogeneity based on the type, size, and monitoring aggressiveness of large shareholders present in a firm. Applying these three measures of heterogeneity, I examine whether large shareholder heterogeneity is associated with the variation in firms' accounting quality and information asymmetry. I also examine new block formations to provide evidence on the consequences of large shareholder investment on firms' accounting quality and information asymmetry. I find that the monitoring aggressiveness of large shareholders is positively associated with firms' accounting quality and information asymmetry. These findings suggest that large aggressive shareholders constrain earnings management, but contribute to firms' overall information asymmetry. Further, using new blockholder data, I find that investments by large aggressive shareholders are positively associated with firms' accounting quality and firms' information asymmetry in the post investment period. This finding provides additional support to my hypotheses that large shareholders play an important role in firms' accounting quality and information asymmetry.
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Date Issued
2011
PURL
http://purl.flvc.org/FAU/3322515
Subject Headings
Investment analysis, Financial services industry, Organizational effectiveness, Measurement, Total quality management
Format
Document (PDF)
Target stock price runup prior to acquisitions
Title
Target stock price runup prior to acquisitions.
Creator
Brigida, Matthew David., College of Business, Department of Finance
Abstract/Description
Information leakage before full acquisitions has been widely documented. The information leakage, and the resulting pre-bid runup in the target's stock, generally increases the total cost of the acquisition. That is, information leakage and the ensuing pre-bid runup is a gain to the target and loss to the acquirer. Herein, I first ascertain the characteristics of full acquisitions that affect the amount of information leakage. I find that if the acquirer borrows to finance the acquisition...
Show moreInformation leakage before full acquisitions has been widely documented. The information leakage, and the resulting pre-bid runup in the target's stock, generally increases the total cost of the acquisition. That is, information leakage and the ensuing pre-bid runup is a gain to the target and loss to the acquirer. Herein, I first ascertain the characteristics of full acquisitions that affect the amount of information leakage. I find that if the acquirer borrows to finance the acquisition then information leakage is greater. Further if the acquirer is foreign, if the target is a high-tech firm, and if the target has options on its stock all increase information leakage. I find hostile deals are effective in reducing information leakage. Lastly, information leakage increases in the percentage of managerial ownership. I next hypothesize that the identity and intent of partial acquirers is known to market participants before the announcement of a partial acquisition. I find that the market can anticipate whether a partial acquirer intends to fully-acquire or take an active role in the management of the target. Also, the market anticipates whether the acquirer is a private investment find or a non-financial corporation. Further, the acquirer's identity or intent is fully reflected in the target's stock price before the announcement of the partial acquisition. These results help explain why there are few partial acquisitions as precursors to full acquisitions., I next hypothesize that macroeconomic factors affect information leakage, and may serve as a signal of when to speculate on acquisitions. I find that information leakage is positively related to shocks in both expected economic conditions and financing costs, the latter signaling to speculators that acquisitions are imminent. I also find information about an imminent full acquisition is leaked earlier when there are positive shocks to economic conditions and financing costs.
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Date Issued
2009
PURL
http://purl.flvc.org/FAU/368613
Subject Headings
Consolidation and merger of corporations, Negotiation in business, Investment analysis, Stocks, Prices, Securities industry, Corrupt practices
Format
Document (PDF)
Penny stock IPOs as investments
Title
Penny stock IPOs as investments.
Creator
Konku, Daniel K., Florida Atlantic University, Wiley, Marilyn
Abstract/Description
Researchers of Initial Public Offerings, IPOs, have, traditionally, filtered out low-priced stocks with cut-off prices depending on individual study. This study examines underpricing, short- and long-run performance of one special class of such low-priced stocks. I examine IPOs filed for and issued as Penny Stocks, as defined by the amended SEC Act of 1990. The study finds average first-day excess returns of 128% over a benchmark NASDAQ Decile 1 Index. The excess returns on nonpenny IPOs...
Show moreResearchers of Initial Public Offerings, IPOs, have, traditionally, filtered out low-priced stocks with cut-off prices depending on individual study. This study examines underpricing, short- and long-run performance of one special class of such low-priced stocks. I examine IPOs filed for and issued as Penny Stocks, as defined by the amended SEC Act of 1990. The study finds average first-day excess returns of 128% over a benchmark NASDAQ Decile 1 Index. The excess returns on nonpenny IPOs issued on the same markets as the penny stocks are 7.6% over the S&P 500 Index. Cross-sectional analyses show that lower-priced penny stocks and stocks of smaller firms are more highly underpriced. Consistent with the information asymmetry hypothesis, penny stocks that were issued on the pink sheets are more highly underpriced than those on the more exposed and more regulated environments of the NASDAQ Small Capitalization markets and the OTC markets. The short- and long-run performance analyses show that, in general, penny stocks have a high performance of between 18% to 20% raw returns in the first year of issue but that declines sharply after a 13-month period. I find an 11-month optimal holding period over which an investor could maximize his returns in a portfolio of penny stocks. I further show that a passive buy-and-hold investment in penny stocks held longer than this optimal period can be a poor investment but an actively-managed penny-stock portfolio can outperform comparable benchmark portfolios of various market indexes on both raw and risk-adjusted basis. Penny stock issuers have shifted from public issues to private placement since 2001. I examine the return to investors in these private issues during the lockup period or until those issues eventually end up in the public domain. The average annualized return to investors during the lockup period is 229%, with only 5% of those issues recording negative returns. Investors who bought these stocks immediately after the lockup period, however, experience an 11% drop in value but the trend reversed after about 10 months, indicating a better long-run performance than those initially issued on the public markets. I examine the effect of the Penny Stock Reform Act (1990) on the number of sanctions that were imposed on the penny stock issuers. The policy intervention analysis shows that the number of sanctions dropped by 9% in the immediate aftermath of the enactment of the Act but increased significantly by nearly 4.7% per quarter thereafter.
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Date Issued
2006
PURL
http://purl.flvc.org/fcla/dt/12223
Subject Headings
Going public (Securities)--Law and legislation--United States, Portfolio management, Penny stocks--Rate of return, Investment analysis
Format
Document (PDF)
The impact and effectiveness of capital investments in the American Recovery and Reinvestment Act of 2009: an assessment using Keynes economic theory
Title
The impact and effectiveness of capital investments in the American Recovery and Reinvestment Act of 2009: an assessment using Keynes economic theory.
Creator
Byaruhanga, Vincent, Thai, Khi V., Florida Atlantic University, College for Design and Social Inquiry, School of Public Administration
Abstract/Description
The purpose of this study is to find out the effect of government spending on capital investments in the American Recovery and Reinvestment Act (ARRA) of 2009 on GDP and employment growth. This research utilized US quarterly data from 2003 QI to 2013 QII. In the first part the research used variables from the Keynes economic model and utilized two-stage least square analysis to assess the effect of government spending on GDP. The results from the regression analysis indicate that an increase...
Show moreThe purpose of this study is to find out the effect of government spending on capital investments in the American Recovery and Reinvestment Act (ARRA) of 2009 on GDP and employment growth. This research utilized US quarterly data from 2003 QI to 2013 QII. In the first part the research used variables from the Keynes economic model and utilized two-stage least square analysis to assess the effect of government spending on GDP. The results from the regression analysis indicate that an increase of one dollar in government spending increases GDP by 1.569 dollars. The researcher found that the general government spending multiplier was 1.9. The coefficient for government spending in the Recovery Act was 0.383, implying that for every one dollar in government spending, Recovery Act spending on capital investments contributed 0.383 dollars.
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Date Issued
2014
PURL
http://purl.flvc.org/fau/fd/FA00004183, http://purl.flvc.org/fau/fd/FA00004183
Subject Headings
Business cycles -- United States -- History -- 21st century, Investment analysis, Keynes, John Maynard -- 1883-1946, Keynesian economics -- Mathematical models, Solow growth model, Solow, Robert M., United States -- American Recovery and Reinvestment Act of 2009
Format
Document (PDF)