The demand for accounting information: young
NASDAQ listings versus S&P 500 NYSE listings
Published online: 6 January 2011
Ó Springer Science+Business Media, LLC 2011
Abstract The main purpose of this paper is to examine accounting information which
can be of poor quality for some industries because uniform regulation applies to all.
However, there is a strong demand for reliable accounting data even when the quality of
the data is poor. Consistent with this premise, I show that among young NASDAQ listings
the valuation coefﬁcient on BVE is higher and that on earnings is not lower for intangible-
intensive ventures than for other ﬁrms. I also show that GAAP OCF provides additional
information that enhances the quality of earning information. This results in a shift in
valuation weight from BVE to earnings for intangible-intensive young NASDAQ listings.
However, these phenomena do not appear for intangible-intensive S&P 500 ﬁrms listed on
NYSE. My results suggest that variations in the demand for reliable ﬁnancial data affect
the valuation coefﬁcients on earnings and BVE.
Keywords NASDAQ and NYSE Á Demand for accounting information Á Valuation
JEL Classiﬁcation M40 Á G10 Á G15
Recent studies reveal that an increasing number of small ﬁrms are now trading on equity
markets. NASDAQ extended the opportunity for newer ventures to raise capital by low-
ering the listing requirement to an average pretax income of only $1 million, as compared
to $10 million for the NYSE.
This means that small unknown ﬁrms can now more easily
Data availability: Data are available from public sources identiﬁed in the text.
Y. Saito (&)
Lumpkin College of Business and Applied Sciences, Eastern Illinois University, Charleston, IL, USA
The requirement for NASDAQ listings are pretax income of $1 million in the most recent ﬁscal year or
two of the last three ﬁscal years compared to $10 million over each of the three prior years for listing on the
Rev Quant Finan Acc (2012) 38:149–175