Information leakage prior to market switches and the importance of Nominated Advisers

Siganos, Antonios; Synapis, Angelos; Tsalavoutas, Ioannis

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 a 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.

Citation

Siganos, A., Synapis, A., & Tsalavoutas, I. (2024). Information leakage prior to market switches and the importance of Nominated Advisers. British Accounting Review, 56(6, Part A), Article 101461. https://doi.org/10.1016/j.bar.2024.101461

• Journal Article Type: Data Article / Data Paper
• Acceptance Date: Aug 10, 2024
• Online Publication Date: Aug 11, 2024
• Publication Date: 2024-11
• Deposit Date: Aug 12, 2024
• Publicly Available Date: Aug 12, 2026
• Print ISSN: 0890-8389
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 56
• Issue: 6, Part A
• Article Number: 101461
• DOI: https://doi.org/10.1016/j.bar.2024.101461
• Keywords: Information leakage, Market switches, Alternative investment market (AIM), Main market (MM), Nominated advisers (Nomads)