Reasons for Delisting and Consequences: A Literature Review and Research Agenda

Stéphanie Serve and Isabelle Martinez ()
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Isabelle Martinez: LGC - Laboratoire de Gestion et de Cognition - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse

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Abstract: This paper discusses the literature on delisting, drawing on USA and international evidence. Given the great heterogeneity in delisting operations, we first consider the standard existing typology based on the initiator of the delisting (the stock market authorities, or the firm itself). Second, while managers often cite high compliance costs (especially due to Sarbanes–Oxley Act implementation) as the official reason for the voluntary delisting of their firm, we highlight that firms face different trade-offs in their delisting decision. We also examine the reasons for involuntary delisting, especially the delisting dilemma faced by stock market authorities when the firm violates the listing requirements. Next, we review the economic consequences of delisting in terms of value creation or value destruction for shareholders. Finally, noting gaps in the literature and other contrasting results, we propose suggestions for future research.

Keywords: IPO survival; Going private; Corporate governance; Cost-benefit analysis; Delisting (search for similar items in EconPapers)
Date: 2017-07
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Citations: View citations in EconPapers (9)

Published in Journal of Economic Surveys, 2017, 31 (3), pp.733-770. ⟨10.1111/joes.12170⟩

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Journal Article: REASONS FOR DELISTING AND CONSEQUENCES: A LITERATURE REVIEW AND RESEARCH AGENDA (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01368879

DOI: 10.1111/joes.12170

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