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http://ssrn.com/abstract=1729947
 
 

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The Real Effects of Delisting: Evidence from a Regression Discontinuity Design


Tor-Erik Bakke


University of Oklahoma - Division of Finance

Candace Jens


Tulane University - A.B. Freeman School of Business

Toni M. Whited


University of Rochester - Simon Business School; National Bureau of Economic Research

December 22, 2010


Abstract:     
We study how the delisting of a firm's stock, and the accompanying drop in liquidity, causally affects a firm's real economic decisions. Although delisting is endogenous, we identify a causal effect by using regression discontinuity design (RDD). This technique suits the delisting problem because the probability of delisting rises discontinuously when observable variables pass known thresholds. We find that delisting results in a modest decline in investment and cash saving and an important and robust decline in employment.

Number of Pages in PDF File: 20

Keywords: delisting, investment, regression discontinuity design

JEL Classification: G31

working papers series





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Date posted: December 24, 2010 ; Last revised: July 5, 2012

Suggested Citation

Bakke, Tor-Erik and Jens, Candace and Whited, Toni M., The Real Effects of Delisting: Evidence from a Regression Discontinuity Design (December 22, 2010). Available at SSRN: http://ssrn.com/abstract=1729947 or http://dx.doi.org/10.2139/ssrn.1729947

Contact Information

Tor-Erik Bakke
University of Oklahoma - Division of Finance ( email )
Norman, OK 73019
United States
Candace Jens
Tulane University - A.B. Freeman School of Business ( email )
7 McAlister Drive
New Orleans, LA 70118
United States
Toni M. Whited (Contact Author)
University of Rochester - Simon Business School ( email )
Rochester, NY 14627
United States
HOME PAGE: http://toni.marginalq.com

National Bureau of Economic Research ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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