《金融市场与机构 Jeff Madura》ch10.pptVIP

10 Stock Offerings and Investor Monitoring Chapter Objectives Describe the stock exchanges where stocks are traded Analyze the process of the initial public offering of stock by a company Be able to interpret a stock quote Explain the institutional use of stock markets Describe the globalization of stock markets Background on Common Stock Common stock = certificate representing equity or partial ownership in a corporation Issued in primary market by corporations that need long-term funds Stock is then traded in the secondary market, creating liquidity for investors and company evaluation for managers Background on Common Stock Owners of common stock vote on: Election of board of directors Authorization to issue new shares Amendments to corporate charter Other major events Many investor assign their vote to management via a proxy Households own about half of all common stock, the rest is owned by institutional investors Background on Preferred Stock Represents equity or ownership interest, but usually no voting rights Trade voting rights for stated fixed annual dividend Dividend paid before common if dividends are declared by board of directors Dividend may be omitted Cumulative provision If common dividend paid, preferred dividend fixed Public Placement of Stock Initial public offerings (IPOs) First-time offering of shares to the public Firm must provide information to public Registration statement to SEC Prospectus Firm is assisted by an investment banker Performance of IPOs Price generally rises on first day Longer-term performance of IPOs is poor Public Placement of Stock Secondary stock offerings New stock issued by firm that already has shares outstanding Shelf Registration 1982 SEC rule Allows firms to place securities without the time lag associated with registering with SEC Stock Secondary Markets Execute secondary market transactions Examples: NYSE, AMEX, Midwest, Pacific NYSE is largest, controlling 80 percent of value of all organized