Pre-listing Pricing Efficiency and Stock Price Reaction to Listing: Some Additional Evidence

Prior empirical studies provide evidence that stock price reactions to listing are more favorable for stocks that have higher prospects for listing gains. These studies focus on the listing gains of liquidity and informational value. Our study examines another dimension of listing gain, namely, improved pricing efficiency. We hypothesize that low efficiency stocks in the pre-listing period would earn higher abnormal returns than high efficiency stocks. Contrary to the predictable hypothesis, our empirical findings indicate that high efficiency stocks show favorable reactions to listing, while low efficiency stocks show no reactions.