There are numerous prior studies on how different factors such as trading volume, volatility and liquidity are affected by changes in trading location. Nevertheless, there is a contradiction between earlier studies and the efficient market hypothesis and there are many studies that confirm that there is no efficient market. These studies are mostly conducted on the US market and indicate that trading volume, volatility and liquidity are affected by changes in trading location. Only a handful of similar studies have been conducted on the Swedish market, which creates a need for further research. In an attempt to fill this gap of knowledge, all of the Swedish trading locations have been studied. Furthermore, the findings in this study will be compared with findings from prior research.
The purpose of this study is to identify the effects a change to a higher trading location in the Swedish stock market have on the asset’s trading volume, volatility and liquidity. To carry out the purpose of this study, a quantitative event-study was conducted and built on a hypothesis-deductive approach. The study is based on prior theoretical hypotheses that have been developed to explain list effects and these hypotheses constitute the foundation of the hypotheses developed. To test the hypotheses statistically, a regression analysis was performed.
The findings in this study prove that companies moving to a higher trading location reduce their volatility. However the results can not prove any change for the trading volume and liquidity, since the regression did not show any significance. The findings support the hypothesis predicting a reduced volatility but give no support to the two other hypotheses predicting an increase in volume and liquidity.
This study contributes with valuable findings that might help and guide companies that consider moving or are in the process of moving to a higher trading location. By using this study as a guiding tool, companies receive indications on how their volatility are affected by a move to a higher trading location. In this respect, companies are given indications on whether a higher trading site would increase their risk or not.
|Date of Award||2015-Sep-17|
|Supervisor||Håkan Jankensgård (Supervisor) & Emil Numminen (Examiner)|
- Degree of Bachelor of Science in Business and Economics
- 15 HE credits
Swedish Standard Keywords
- Business Administration (50202)
- trading volume
- change in trading location
- list effect
- efficient market hypothesis