Gary E. Powell

Does NYSE Listing Affect Firm Visibility

Corporate managers often cite improved firm visibility as a motive for listing on the New York Stock Exchange (NYSE). We use three proxies to test this motive: the number of analysts following a firm, the number of institutional shareholders, and the number of shares held by institutions. We compare visibility changes over successive six-month periods for a sample of firms that listed on the NYSE and find that the changes in the post-listing period are less than the changes for the two pre-listing periods. Further tests suggest that increased visibility for a firm is primarily associated with changes in market capitalization, not with listing itself.

The visibility effects of Amex listing

Abstract This study examines whether visibility changes for companies moving from Nasdaq to the Amex. A control sample of companies that did not leave the Nasdaq Stock Market serves as a basis for comparing changes in visibility. Four proxies are used to measure visibility: (1) the number of analysts estimating the company’s next fiscal year’s earnings (NOA), (2) the number of institutional shareholders (NOI), (3) the number of shares held by institutions (NOS), and (4) the number of citations in The Wall Street Journal (NOC). The initial evidence supports a relationship between Amex listing and visibility gains when measured by NOI, NOS, and NOC. Small companies show significant visibility gains in NOA. The findings contain evidence that companies seeking Amex listing are generally neglected by analysts and institutions. Regression analysis provides additional evidence that Amex listing, not earnings growth, helps to explain visibility gains in NOI, NOS, and NOC.

Portfolio rebalancing, institutional ownership, and the small firm-January effect

Abstract We use monthly reported firm share ownership by institutions to provide direct evidence that portfolio rebalancing exists in the U.S. We find rebalancing exists in sufficient size to affect prices around the turn-of-the-year and conclude that portfolio rebalancing may be a substantial part of the small firm-January effect in the U.S. The findings are more important than simply evidence leading to the resolution of an anomaly since they cast doubt on our current asset pricing models and on previous efficient markets studies. The findings also suggest that investors asset allocations may not be optimally determined without the inclusion of a portfolio rebalancing parameter.

The effect of NYSE listing on a firm’s media visibility

The most frequently cited reason by corporate managers for switching their firm’s trading location from Nasdaq to the NYSE is to improve visibility. This study examines whether these perceptions about listing are real or illusory and whether firm size affects media visibility. Based on a large sample of firms that listed on the NYSE compared with a matched sample of firms remaining on Nasdaq, the results show that NYSE listing does not lead to gains in media visibility during the period immediately after listing. Over a longer period, small- and medium-sized firms experience significant gains in media visibility compared with large firms. Additional tests show that increased media coverage is attributable much more to the rapid earnings growth before listing than to listing. Therefore, managers erroneously attribute the visibility gains to NYSE listing.

Management views on corporate governance and firm performance

We survey top managers of Fortune 1000 companies to learn if industry practitioners agree with the findings of academic research on specific corporate governance issues. We focus on board composition and size, executive/director compensation and ownership, firm performance, and other issues. The results suggest that the views of responding managers appear at odds with other empirical evidence provided in the literature on the majority of the issues examined. In addition, respondents are often unable to offer an opinion about whether they agree or disagree with specific corporate governance issues.