IDEAS home Printed from https://ideas.repec.org/a/rbq/journl/i136-137p42-62.html
   My bibliography  Save this article

Consequences of Voluntary Stock Exchange Section Switching on Stock Prices, Liquidity and Volatility

Author

Listed:
  • Abdoul K. Cissé

    (ISG International Business School and CNRS)

  • Patrice Fontaine

    (CNRS and Léonard de Vinci Pôle Universitaire)

Abstract

The decision to switch stock exchange section is an important, but one of the least studied questions in the litterature. especially for voluntary transfer decisions. Managers believe that switching the trading compartment of their common stocks to a more important one creates value for their firms by improving visibility, stocks’ liquidity and raising capital at lower cost. In this article, we examine market reactions around trading compartment switchings. The results, in general, indicate a positive market reaction around the transfer announcement and an improvement of stock liquidity after that date. However, the market reaction weakens significantly after admission to the new stock exchange section. Our findings also reveal a link between stock price reaction to a compartment transfer and the pre-transfer liquidity level. Finally, we highlight that compartment transfer reduces volatility of switching stocks, owing to the decrease in the firm-specific risk rather than the systematic risk.

Suggested Citation

  • Abdoul K. Cissé & Patrice Fontaine, 2015. "Consequences of Voluntary Stock Exchange Section Switching on Stock Prices, Liquidity and Volatility," Bankers, Markets & Investors, ESKA Publishing, issue 136-137, pages 42-62, May-June.
    • Handle: RePEc:rbq:journl:i:136-137:p:42-62
    as

    Download full text from publisher

    File URL: http://www.revue-banque.fr/article/consequences-voluntary-stock-exchange-section-swit
    Download Restriction: price
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Abo Rodrigue Majoie, 2021. "Economic Consequences of Section Transfers in Japan: Change in Investor Base," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 10(2), pages 1-1.
    2. 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.

    More about this item

    Keywords

    Market Section Transfer; Price Reaction; Liquidity Effect; Information Asymmetry; Event Study;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbq:journl:i:136-137:p:42-62. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marise Urbano (email available below). General contact details of provider: http://www.eska.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.