Explaining the NYSE Listing Choices of NASDAQ Firms

Arnold Cowan (), Richard B. Carter, Frederick H. Dark and Ajai K. Singh

Financial Management, 1992, vol. 21, issue 4

Abstract: Traditionally, financial theory has offered little guidance to managers who must choose whether to list their stock on an exchange or allow it to continue trading over-the-counter. Recent developments in market microstructure theory allow a more careful analysis of the exchange listing decision. Market microstructure theory implies that firms list their stocks on exchanges to reduce transaction costs to their investors. A major component of the cost of trading common stocks is the bid-ask spread. Several differences exist between the trading arrangements, or microstructure, of the New York Stock Exchange and NASDAQ that may contribute to differences in bid-ask spreads for a given stock depending on where it is traded.

Date: 1992
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