Rules Governing the Transfer of Ownership: Wealth Effects and the Influence of Ownership Structure

Henk Berkman and Farshid Navissi

International Review of Finance, 2000, vol. 1, issue 3, 229-244

Abstract: 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.

Date: 2000
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