Exchange listing type and firm financial reporting behavior

We examine the link between the choice of firms to switch exchanges and managers' financial reporting behavior, and the impact of this link on post-listing performance. Among three types of exchange listings, NASDAQ-to-AMEX firms report significantly higher pre-listing abnormal accruals than do NASDAQ-to-NYSE and AMEX-to-NYSE firms. The pre-listing abnormal accruals are negatively associated with the post-listing performance, with the association driven mainly by NASDAQ-to-AMEX firms. These results suggest that the type of listing change affects managers' reporting behavior in the sense that the switch to an exchange with stricter listing standards appears to mitigate managerial incentives to inflate reported earnings.