As the regulation of public companies has tightened, many companies have switched to stock exchanges with lower regulatory requirements. We analyse the consequences for smaller quoted companies of switching between the two London markets, which differ in their regulatory regimes. Firms that switch to lighter regulation experience, on average, negative announcement returns of approximately 5%. However there is a longer-term upward drift in stock returns after the switch. We relate these financial returns to improvements in operating performance in the years following the switch, suggesting that for some companies, and their investors, a lighter regulatory environment may be appropriate.