The Curious Case of Changes in Trading Dynamics when Firms Switch from NYSE to Nasdaq

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Abstract

Voluntarily switching trading location from the New York Stock Exchange to Nasdaq is a new phenomenon, with 53 companies making the switch since 2000. This paper examines the stated reasons for the move and investigates their consistency with the subsequent market dynamics, including effects on liquidity, trading activity, and visibility. We find the move to Nasdaq increases trading costs, improves visibility, and attracts more liquidity providers in the long term, explaining the subsequent increase in trading volume and supporting many of the management statements justifying the move. Our findings suggest multi-dimensional aspects may be important considerations in moves between exchanges.

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Original languageEnglish
JournalJournal of Financial Markets
Early online date19 Jul 2018
DOIs
Publication statusPublished - 2018

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