An SEC regulation that requires tender offers to be available to all holders of the identical class of the security. Taobiz explains All-Holders Rule For example, if company ABC has tendered an offer to buy back its B shares, then all holders of this class must be allowed to participate in the buy back. The SEC does not require ABC co. to offer this buy back to the shareholders of its other classes. This rule is especially important during takeover bids, ensuring that any tender offers made by the acquiring company cannot be directed only to those shareholders in favor of the takeover.
A condition used on a buy or sell order to instruct the broker to fill the order completely or not at all. If there is insufficient supply to meet the quantity requested by the order then it is canceled at the close of the market. Taobiz explains All Or None - AON For example, if you send an AON order to your broker requesting 200 shares at $15, the broker will not fill the order unless he or she can obtain the 200 shares at $15. This prevents investors from having orders half filled before they expire. This is contrary to a common limit order, which is commonly partially filled. For example, if 150 shares trade at $15 and then rise to $17, the 150 shares will be purchased by the investor with the limit order and the remainder will be bought when the shares fall back to $15. If the trader had an AON order then he or she will not receive any shares and will have to resubmit the order the next day to buy the 200 shares at $15.
A trade that has only one agent acting for the buyer and seller. Also known as Dual Agency. Taobiz explains Agency Cross Agency crosses occur when a broker receives perfectly offsetting trades simultaneously. The broker must send down the orders to the trading floor, announce the bid and manually cross the trades after no better bid is made.
A type of internal cost that arises from, or must be paid to, an agent acting on behalf of a principal. Agency costs arise because of core problems such as conflicts of interest between shareholders and management. Shareholders wish for management to run the company in a way that increases shareholder value. But management may wish to grow the company in ways that maximize their personal power and wealth that may not be in the best interests of shareholders. Taobiz explains Agency Costs Some common examples of the principal-agent relationship include: management (agent) and shareholders (principal), or politicians (agent) and voters (principal). Agency costs are inevitable within an organization whenever the principals are not completely in charge; the costs can usually be best spent on providing proper material incentives (such as performance bonuses and stock options) and moral incentives for agents to properly execute their duties, thereby aligning the interests of principals (owners) and agents.
A problem arising from the conflict of interested created by the separation of management from ownership (the stockholders) in a publicly owned company. Corporate governance mechanisms, such as boards of directors and the issuance of debt, are used in an attempt to reduce this conflict of interest. However, introducing debt into the picture creates yet another potential conflict of interest because there are three parties involved: owners, managers and lenders (bondholders), each with different goals. Taobiz explains Agency Cost Of Debt For example, managers may want to engage in risky actions they hope will benefit shareholders, who seek a high rate of return. Bondholders, who are typically interested in a safer investment, may want to place restrictions on the use of their money to reduce their risk. The costs resulting from these conflicts are known as the agency cost of debt.
The price level performance of a newly issued stock after its IPO. There is no standard ending time period that is considered, but after-market performance begins on the first day of trading on the exchange. Typically after-market performance will be measured through the lock-up period, anywhere from three to nine months after the IPO date. This allows for the market to "digest" the insider shares that might be sold quickly after the lock-up period ends. By looking at the after-market performance of all IPOs over a certain time period (as in a calendar year), analysts and investment bankers can determine the overall market demand for new issues, and possibly move up or delay a schedule IPO as a result. Taobiz explains After-Market Performance To the company management and employees, the after-market performance of the stock is vital. If the company can reach and sustain a higher market valuation than originally estimated by the underwriting syndicate in open market trading, equity funding will be much more affordable than other methods of raising capital. Investors should keep in mind that an IPO may only represents a small percentage of total shares outstanding (usually about 20%). The remaining bulk of shares can be used to raise capital down the road as the company looks to grow and enter new markets.
Trading after regular trading hours on the major exchanges. Also known as the "after-hours market". Taobiz explains After-Hours Trading - AHT This was once reserved for institutional investors, but now individuals may also trade after hours. Participation by market makers and electronic communication networks (ECNs) is voluntary and, as a result, this kind of trading may offer less liquidity than that done during normal hours of trading. If you are trading in pre-market or after-hours trading, you should always use a limit order.
The last transaction and final price of a security that is traded in the after-hours market. The after-hours market is generally more volatile than the regular market, but it can give investors an idea of what to expect at the start of trading the next day. Also referred to as "after-hours close". Taobiz explains After-Hours Market Close The percentage of change in the after-hours market is computed by comparing the after-hours close to the market close. If the last price in the market for ABC stock was $5 during regular market trading, this is the opening price in the after-hours market. If the after-hours market close was $10 due to a great earnings release after the market close, the increase expressed as a percentage would be 100%.
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