This paper investigates the effect of California's Proposition 103 on the market value of publicly traded property- and liability-insurance companies. The passage of this referendum on November 8, 1988 moved California from a market-oriented to a heavily regulated insurance-pricing system. During the period surrounding the election, the average stock price of insurance companies doing business in California declined by 6.91%. The decline is positively related to the proportion of a firm's premiums affected by the referendum and the proportion generated in other states where insurance regulation is likely to change, and negatively related to the firm's profitability.

Exchangeable debt is convertible into the common stock of a target firm in which the issuing firm has an ownership position. It signifies a potential change in the issuing firm's asset composition through the divestiture of the ownership stake in the target firm. We find that announcements of exchangeable debt offers are associated with insignificant abnormal returns for the shareholders of issuing firms. The target firm's share price declines, however, when an exchangeable debt offer is announced. This result is consistent with the offer's potential to reduce the ownership concentration of the target firm's common stock.