Abstract

http://ssrn.com/abstract=6082
 
 

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The Long-Run Negative Drift Of Post-Listing Stock Returns


Bala G. Dharan


Harvard Law School; Charles River Associates (CRA); Rice University

David L. Ikenberry


Leeds School of Business, University of Colorado Boulder; University of Illinois at Urbana-Champaign - Department of Finance



Abstract:     
After firms move trading in their stock to the American or New York Stock Exchanges, stock returns are generally poor. Many of these firms have been public only a short period of time. Moreover, once listed, several firms make seasoned equity offerings. However, the negative post-listing drift is not a manifestation of the new-equity issuance puzzle. Instead, the negative post-listing drift appears to be the result of managers opportunistically choosing when to apply for listing. The barriers posed by initial listing requirements appear to cause some managers to apply for listing prior to a decline in performance. These requirements are more binding in smaller, less widely held stocks, the same stocks for which the drift is most severe. For large, more widely held firms, the post-listing drift is absent. This finding of opportunistic behavior is strikingly similar to the market timing arguments that have been offered to explain the poor performance observed following equity offerings.

JEL Classification: G13

working papers series


Not Available For Download

Date posted: April 11, 1995  

Suggested Citation

Dharan, Bala G. and Ikenberry, David L., The Long-Run Negative Drift Of Post-Listing Stock Returns. Available at SSRN: http://ssrn.com/abstract=6082

Contact Information

Bala G. Dharan
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
Charles River Associates (CRA) ( email )
Boston, MA
United States
Rice University ( email )
6100 South Main Street
Houston, TX 77005
United States
David L. Ikenberry (Contact Author)
Leeds School of Business, University of Colorado Boulder ( email )
Boulder, CO 80309-0419
United States
303-492-1809 (Phone)
University of Illinois at Urbana-Champaign - Department of Finance ( email )
1206 South Sixth Street
340 Wohlers Hall
Champaign, IL 61820
United States
217-333-6396 (Phone)
217-333-4101 (Fax)
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