The NASDAQ Restructuring: Do Names Even Matter?

Abstract

This paper examines the impact of NASDAQ’s July 2006 restructuring to create the new Global Select and Global Markets. The new tiers changed NASDAQ from a two-tiered marketplace (National and Capital Markets) to a three-tiered marketplace (Global Select, Global, and Capital Markets). I examine the asset-pricing impact on NASDAQ-listed firms affected by the restructuring, as well as any changes to NASDAQ’s ability to compete with the NYSE for new listings. While initial data analysis indicates a potential announcement effect for Global Select Market stocks, further analysis indicates little more than a momentum effect from overall market movement in the weeks prior to the creation of the new tier. Additionally, analysis shows that NASDAQ became less competitive against NYSE in attracting new listings after the restructuring. These findings cast doubt on any utility resulting from the restructuring.