The effects of exchange listing on market quality: Evidence from over‐the‐counter uplistings

Abstract

We study the effects of exchange uplisting from the modern over-the-counter (OTC) markets on liquidity, volatility, and price discovery. In a series of difference-in-differences tests, we find that for a sample of OTC treatment firms that uplist to the NASDAQ, New York Stock Exchange (NYSE), or NYSE MKT, relative to matched control firms, liquidity improves dramatically after listing. We also show that price discovery improves for treatment firms vis-à-vis control firms after listing. The results contribute to the discussion surrounding the facilitation of capital formation and offer important insights to investors, managers, and exchange officials.

The impact of exchange listing on corporate governance: Evidence from direct listings

“…Reputable development REITs looking to harvest profitable investments would certainly fit in this category, especially managers of PNLRs whose projects may have had poor initial performance but attractive long‐run upside (i.e., J‐curve payoffs). These companies should enjoy higher valuations as they distinguish themselves from the low‐quality types and gain the added benefit of liquidity (Davis et al., 2021), and greater access to institutional investors by becoming a listed firm. Even if their success is readily apparent and management does not currently extract rents, exchange listing may still have value.…”

“…the added benefit of liquidity (Davis et al, 2021), and greater access to institutional investors by becoming a listed firm. Even if their success is readily apparent and management does not currently extract rents, exchange listing may still have value.…”

The dark side of IPOs: Examining where and who trades in the IPO secondary market

“…For information on liquidity changes in firms that move from the over-the-counter markets to exchanges, seeDavis et al (2021).28 A limitation of this paper is that we cannot explicitly identify if potential AT counterparties, such as issuers who may repurchase or reissue stock or IPO investors who may have missed primary market allocations, use the various trading dynamics outlined in this study.…”