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Rules Governing the Transfer of Ownership: Wealth Effects and the Influence of Ownership Structure
Author(s) -
Berkman Henk,
Navissi Farshid
Publication year - 2000
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/1468-2443.00012
Subject(s) - transferability , business , monetary economics , share price , transfer (computing) , empirical evidence , transfer pricing , economics , accounting , market economy , incentive , finance , philosophy , epistemology , parallel computing , stock exchange , computer science , multinational corporation
This paper studies a unique change in regulation governing the transfer of share ownership in New Zealand. The new regulation requires all listed firms to adopt one of three proposed takeover regimes, ranging from almost free transferability of shares to a uniform pricing rule. Our empirical results indicate that a higher proportion of shares held by blockholders makes adoption of a liberal takeover regime more likely. We also find that an increase in the proportion of non‐beneficial shares held by directors and shares held by trust companies increases the probability that a firm adopts a more restrictive takeover regime. Furthermore, the results from an event study show that firms adopting the liberal takeover regime experience substantial positive abnormal returns compared to firms adopting the standard or restrictive regime.