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Disclosure rules, controlling shareholders, and trading activity in the new issues market

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  • Samdani, Taufique

Abstract

This study examines the impact of controlling shareholders’ ownership on trading activity under regimes with different disclosure rules. In regimes with ambiguous disclosure rules, trading volume and turnover are higher when controlling shareholders’ ownership is low and their control rights potentially exceed their cash flow rights. However, this impact diminishes in regimes with strict and unambiguous disclosure rules. These findings are robust to endogeneity concerns, suggesting that investor beliefs about potential agency conflicts are less heterogeneous, as evidenced by their trading behavior when disclosure rules are stringent and well defined. The results highlight the role of disclosure credibility and readability in influencing trading activity, offering new insights into the relationship between ownership structure and market behavior.

Suggested Citation

  • Samdani, Taufique, 2024. "Disclosure rules, controlling shareholders, and trading activity in the new issues market," Journal of Banking & Finance, Elsevier, vol. 163(C).
    • Handle: RePEc:eee:jbfina:v:163:y:2024:i:c:s0378426624000803
    DOI: 10.1016/j.jbankfin.2024.107168
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    More about this item

    Keywords

    IPOS; Trading activity; Controlling shareholders; Agency conflicts; Disclosure rules; Heterogeneous investor beliefs;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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