Abstract
This study tests the information leakage hypothesis prior to the public announcement of firms switching between the Alternative Investment Market (AIM) and the Main Market (MM) in the UK. We find significant abnormal stock returns 60 trading days prior to the announcement of these switches. The results are robust after controlling for switching anticipation, rumors, other major corporate announcements, and firm performance one year prior to the switch. We also show that having a reputable Nominated Adviser (Nomad) significantly moderates the abnormal stock returns prior to market switches. However, this effect does not hold when Nomads also act as brokers in firms that switch markets. Overall, these findings provide novel evidence about abnormal stock returns prior to the announcement of market switches in the UK and the role of Nomads. As such, we shed light on the significance and the limits of decentralized regulation on informed trading activity.
| Original language | English |
|---|---|
| Article number | 101461 |
| Number of pages | 26 |
| Journal | British Accounting Review |
| Volume | 56 |
| Issue number | 6 |
| Early online date | 11 Aug 2024 |
| DOIs | |
| Publication status | Published - Nov 2024 |
Bibliographical note
This is an open access article distributed under the terms of the Creative Commons CC-BY license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.Funder
This study has been funded by the Economic and Social Research Council.Funding
This study has been funded by the Economic and Social Research Council.
| Funders | Funder number |
|---|---|
| Economic and Social Research Council | 1798199 |
Keywords
- Information leakage
- Market switches
- Alternative investment market (AIM)
- Main market (MM)
- Nominated Advisers (Nomads)