Why do only some Nasdaq firms switch to the NYSE? Evidence from corporate transactions

Every year only a small fraction of Nasdaq firms that are eligible to move to the NYSE actually choose to move. This is surprising as prior literature documents significant gains to listing on NYSE. Gains in visibility and liquidity associated with a move to NYSE reduce the firm's cost of capital. Consequently, firms are more likely to move to NYSE when they are raising external financing or engaging in acquisition activity. We study a set of corporate transactions - issue of debt, equity and involvement in acquisitions - for a group of Nasdaq firms that chose to move to the NYSE and a size and industry-matched control group over the period 1986-1998. We find that firms that move to the NYSE issue more debt and equity, and engage in more asset transactions following their move relative to control firms. Our results suggest that the listing decision of a firm is often not isolated, but rather related, to other important corporate objectives of the firms.