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IPO Listings: Where and Why?


  • We appreciate comments from Paul Bennett, Bruno Biais, Laura Field, Frank Hathaway, Jean Helwege, and Kathy Kahle, and earlier input from Laurie Krigman. Data regarding sales of restricted stock are from a research project funded by the New York Stock Exchange (Anderson, Dyl, and Krigman, 2005).


According to most research, firms benefit from being listed on the New York Stock Exchange (NYSE). Nevertheless, 224 of 640 firms that went public from 1993 through 2000 and were eligible for a NYSE listing chose to list their stock on Nasdaq. We hypothesize that this choice may be related to Securities and Exchange Commission (SEC) Rule 144. The rule regulates the sale of restricted stock by limiting the amount of unregistered stock that can be sold by an individual. We investigate the determinants of post-IPO sales of restricted stock, examine IPO firms' listing choices, and find evidence consistent with firms selecting Nasdaq to reduce the effect of the limits on selling restricted stock imposed by the SEC's Rule 144. Venture capitalists play an important role in this listing decision.

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