Investor Recognition, Liquidity, and Exchange Listings in the Reformed Markets

Pankaj Jain and Jang-Chul Kim

Financial Management, 2006, vol. 35, issue 2

Abstract: We examine multiple facets of firms’ decisions to list on the NYSE. Although the average Nasdaq spreads are now comparable to the average NYSE spreads, we find that firms continue to switch from Nasdaq to the NYSE, and that they experience positive cumulative abnormal returns on listing. Using a simultaneous system of equations approach, we establish that enhanced investor recognition mainly explains this phenomenon. A logistic regression suggests that corporate listing choice is consistent with these findings, since eligible unlisted firms already have high volumes and recognition and might not benefit as much as do firms that actually switch.

Date: 2006
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