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OTC Market Switching and Stock Returns: Some Empirical Evidence

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  • Baker, H Kent
  • Edelman, Richard B

Abstract

In this study the effect on the common stock returns of 278 firms that switched OTC market segments from 1982 to 1987 is examined. It is hypothesized that abnormally positive returns are associated with news of the move from the NASDAQ to the NASDAQ National Market System (NMS) inclusions for stocks with low versus high liquidity before switching. Using event study methodology, results support these hypotheses. Unlike post-listing studies, the evidence reveals no anomalous return behavior during the post-NMS inclusion period studied.

Suggested Citation

  • Baker, H Kent & Edelman, Richard B, 1990. "OTC Market Switching and Stock Returns: Some Empirical Evidence," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 13(4), pages 325-338, Winter.
  • Handle: RePEc:bla:jfnres:v:13:y:1990:i:4:p:325-38
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    Cited by:

    1. Cissé, Abdoul Karim & Fontaine, Patrice, 2016. "Why do companies transfer the trading compartment of their common stocks," Research in International Business and Finance, Elsevier, vol. 36(C), pages 624-640.
    2. LaPlante, Michele & Muscarella, Chris J., 1997. "Do institutions receive comparable execution in the NYSE and Nasdaq markets? A transaction study of block trades," Journal of Financial Economics, Elsevier, vol. 45(1), pages 97-134, July.
    3. Leledakis, George N. & Papaioannou, George J. & Travlos, Nickolaos G. & Tsangarakis, Nickolaos V., 2009. "Stock splits in a neutral transaction cost environment: Evidence from the Athens Stock Exchange," Journal of Multinational Financial Management, Elsevier, vol. 19(1), pages 12-25, February.
    4. Wenbin Tang & Hoang Nguyen & Van Nguyen, 2013. "The effects of listing changes between NASDAQ market segments," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 37(4), pages 584-605, October.
    5. A.K Cisse, 2011. "Transfert de marché de cotation : Motivations et Conséquences," Post-Print halshs-00658730, HAL.
    6. A.K Cisse, 2010. "Consequences economiques du transfert de marché de cotation : cas du NYSE-Euronext Paris," Post-Print halshs-00534749, HAL.

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