Why do companies transfer the trading compartment of their common stocks |
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| Institution: | 1. ISG International Business School (GrIIsG), Paris, France;2. CNRS (EUROFIDAI) and Léonard de Vinci Pôle Universitaire, Finance Lab, Paris La Défense, France;1. Nyenrode Business University, Breukelen, The Netherlands;2. Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, The Netherlands;1. The Economics and Management Department, The Open University of Israel, Israel;2. Department of Economics, University of Bath, United Kingdom;3. Institut für Höhere Studien, Wien, Austria;4. Department of Economics, University of California, Davis, United States of America;1. Bristol Business School, University of the West of England, Bristol, UK;2. Westminster Business School, University of Westminster, London, UK;1. Faculty of Administrative and Financial Sciences, Al Baha University, Saudi Arabia;2. ISG Tunis, University of Tunis, Tunisia;1. IESEG School of Management (LEM-CNRS), Rue de la Digue 3, F-59000 Lille, France;2. University of Liège HEC Management School, Rue Louvrex 14, B-4000 Liège, Belgium |
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| Abstract: | We analyze the motives and determinants of voluntarily stock exchange section switching on the NYSE Euronext. By strategically deciding trading-section transfer when it is beneficial, managers expect to reduce their liquidity and invisibility costs, cost of capital, or their listing costs. We show that managers decide to change the trading compartment of their common stocks based on various factors including firm's size, liquidity level, debt ratio, and expected growth opportunities. Firms that move voluntarily from a less or non regulated compartments to a more regulated one are likely to have transferred to increase their credibility, improve their stocks’ liquidity, re-balance their leverage, and to finance their growth opportunities. Whereas those that move their common stocks toward a less-regulated compartments do it mainly for costs saving reasons. |
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| Keywords: | Stock exchange section transfer Motivations Determinants Probability of transfer Logit regression |
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