| dc.description.abstract | MiFID II was implemented in 2018 and requires that cost of research products is unbundled
commission fees. An anticipated consequence of the” inducement rule” is reduced coverage of
small-and mid-cap stocks. In light of prior literature on the relationship between analyst
coverage and stock liquidity, we investigate whether MiFID II has 1) affected the analyst
coverage of Norwegian small- and mid-cap stocks, and 2) affected the liquidity of Norwegian
small- and mid-cap stocks. Through our empirical analysis, we are not able to estimate a
meaningful impact of MiFID II on the number of analysts, with a marginal, insignificant
reduction of 0.04 per cent. However, we do find that the liquidity of Norwegian small- and
mid-cap stocks has decreased following MiFID II and estimate an increase in the relative Bid-
Ask spread of ~100 bps in the subsequent period. | nb_NO |
