Читать книгу Equity Markets, Valuation, and Analysis - H. Kent Baker - Страница 20

This part contains four chapters (Chapters 2–5) that provide important background information that sets the stage for the remaining sections. These chapters examine ownership structure and stock classes, equity markets and performance, securities regulation, and investor psychology and equity market anomalies.

Chapter 2 Ownership Structure and Stock Classes (Christopher J. Barnes, Ehsan Nikbakht, and Andrew C. Spieler) This chapter examines different ownership structures and stock classes. Several exceptions are available to the widely held belief that a share of common stock is the same as any other share. The most common exception is multiple-class common stock (dual-class stock), which offers some shareholders superior voting rights relative to shareholders in a separate class. Even for companies with only a single class of common stock, several types of shares may be available. For example, investors in tracking stock have no direct claim, as their investment targets the financial performance of a subdivision of a larger corporation. Cross-listings and depositary receipts each facilitate investment in corporations whose primary listings are in other countries. Although cross-listings represent a direct listing on a foreign stock exchange, depositary receipts are indirect ownership vehicles in which an intermediary institution holds shares directly and offers receipts certifying ownership for the investor. Another single-class ownership structure is that of dual-listed companies, which may arise when two companies combine business operations without merging the respective legal entities. This structure enables two separate and distinct classes of shares, and therefore shareholders, to survive the merger. These dual-listed companies try to equalize ownership such that a share of one twin equals a share in the other, but each twin's shares correspond to different underlying legal entities. Each of these structures falls under the umbrella of common stock but exemplifies the potential differences among shares of common stock from a single company.

Chapter 3 Equity Markets and Performance (Jay T. Brandi and Xudong Fu) Equity markets and performance develop the connections among the economy, financial markets, employment, profitability, and the value of corporate securities – specifically equity securities. This chapter presents various approaches to segmenting the financial markets by issue type, issue size, and other characteristics and discusses using equity indices as economic indicators. It also discusses the efficient market hypothesis and its three forms along with the characteristics of marketability and liquidity and how they relate to the economy, financial markets, equity performance, and valuation.

Chapter 4 Securities Regulation (Douglas Cumming and Sofia Johan) This chapter summarizes securities regulation pertaining to trading on stock exchanges in most countries around the world. It identifies different types of trading rules for different forms of misconduct, including but not limited to insider trading (such as front-running and client precedence), price manipulation (such as ramping/gouging and prearranged trades), volume manipulation (such as spoofing and switching), and broker-agency misconduct (such as violation of trade-through rules and know-your-client rules). The chapter reviews research on how cross-sectional and time-series differences in rules across countries and over time affects market liquidity. It also explains how rules are enforced with computerized surveillance technology and how differences in enforcement across countries and over time substantially affect market efficiency and integrity.

Chapter 5 Investor Psychology and Equity Market Anomalies (Hunter M. Holzhauer) This chapter examines investor psychology and equity market anomalies. It begins with a brief synopsis of the differences between behavioral finance and traditional finance. It examines investor psychology using foundational ideas behind behavioral finance like bounded rationality and prospect theory to explore why investors are not always rational. Although these two foundational ideas are certainly related, they showcase several different issues and biases that are relevant to investors. The final section uses equity market anomalies to discuss different violations of the efficient market hypothesis. The chapter concludes by explaining the importance of behavioral finance and its role in investor psychology and choice behavior.