The Main Step -The Effects on Institutional Ownership of Moving from First North to The Swedish Main List

Abstract: Since NASDAQ’s alternative market place First North was first launched in 2006, many firms have considered the option of taking the next step to the Swedish main exchange – the Stockholm stock exchange. While the alternative marketplace offers much to the young and immature firms, many of them quickly grow up and wish to move on to a more mature marketplace. Since 2006, approximately 60 firms have taken the step from First North to the main Stockholm stock exchange, and many of them offer the same reasoning and arguments to justify such a step. Increasing the amount of institutional ownership is a recurring desire in firms’ prospects prior to a change of lists. There are many reasons why firms wish to acquire more institutional ownership, it might be to improve corporate governance or to attain the firm a seal of quality. This paper examines the effects on institutional ownership of a listing change from First North to the Swedish main list – the Stockholm stock exchange. The report is directed towards decision makers, management and investors, and intends to compose a basis to help those parties make more informed decisions. It also aims to invite to further research on the area. The study is based on, and inspired by, previous research reports and studies on the area examining the consequences of a listing change, both Swedish and international. The study approaches the research questions with a deductive strategy of quantitative nature. With a method of an event-study the paper examines how the change of list itself affect institutional ownership and shares owned by institutions, by comparing data prior to change and post change. The main findings are that there is a positive effect on the number of institutional owners for firms that undergo the listing change. However, the results do not provide any evidence for an effect on the number of institutionally owned shares. The increase in number of institutional owners is essentially explained by investor awareness effects.