Visibility effects and timing in stock listing changes: Evidence from operating performance

We extend the timing motive hypothesis to account for the influence of improved visibility as a result of a stock listing change. The results are, in general, consistent with this proposition, especially for Nasdaq and AMEX firms that switch to the NYSE. The empirical findings support the positive relationship of the visibility effect with post-listing operating returns. The evidence is mixed for the timing motive. The evidence is also mixed for both timing and visibility in the case of Nasdaq firms that move to the AMEX. An important finding is that post-listing operating performance has improved after the 1996 Nasdaq market reforms that reduced the NYSE advantage of lower liquidity costs and, thus, made opportunistic timing less important in listing change decisions. In addition, some evidence points to an association between differences in expected visibility improvement due to variation in listing standards and the pattern of post-listing operating performance.