The Nasdaq-Amex Merger, Nasdaq Reforms, and the Liquidity of Small Firms
26 Pages Posted: 1 Dec 2002 Last revised: 10 Aug 2009
Abstract
After the Nasdaq and AMEX merged in 1998, officials of the new entity argued that some "smaller, harder to trade" companies on Nasdaq should switch to AMEX to improve liquidity. This recommendation is based on the traditional view among academics and practitioners alike that a substantial trading cost reduction should be realized when a company switches from the multidealer Nasdaq system to the AMEX specialist system. However, in light of the 1997 Nasdaq reforms, we reexamine the validity of these arguments using data from 1996-1998 on firms that switch from the Nasdaq to AMEX or NYSE. Evidence from transaction costs, volatility, and stock returns shows declining benefits to switching over the sample period. Our findings indicate that the liquidity improvement from exchange listing is limited in the wake of the Nasdaq reforms of 1997.
JEL Classification: G10, G14
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Using Matched Samples to Test for Differences in Trade Execution Costs
By Ryan J. Davies and Sang Soo Kim
-
Competition in the Market for Nasdaq Securities
By Michael A. Goldstein, Andriy Shkilko, ...
-
Measures of Implicit Trading Costs and Buy-Sell Asymmetry
By Gang Hu
-
Locked and Crossed Markets on Nasdaq and the Nyse
By Andriy Shkilko, Bonnie F. Van Ness, ...
-
Clean Sweep: Informed Trading Through Intermarket Sweep Orders
By Sugato Chakravarty, Pankaj K. Jain, ...
-
Market Structure, Fragmentation and Market Quality - Evidence from Recent Listing Switches
By Li Wei and Paul B. Bennett
-
Price and Quantity Quotes on NASDAQ: A Study of Dealer Quotation Behavior
By Kee H. Chung and Xin Zhao
-
Is Market Fragmentation Harming Market Quality?
By Maureen O'hara and Mao Ye
-
Short- and Long-Term Effects of Multimarket Trading
By Vanthuan Nguyen, Bonnie F. Van Ness, ...