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

40 Pages Posted: 11 Apr 2015

See all articles by Isabelle Martinez

Isabelle Martinez

University of Toulouse - Paul Sabatier; LGC

Stephanie Serve

University of Cergy-Pontoise - THEMA

Constant Djama

University of Toulouse 1

Date Written: April 7, 2015

Abstract

This paper provides a literature review of the delisting phenomenon in the US, the UK and Continental Europe. Delisting is defined as the removal of a listed company from a stock exchange, but the phenomenon is characterized by a great heterogeneity. The observed heterogeneity in delistings leads us to address a fundamental question: why would a firm be delisted from the stock exchange during its lifetime? Analysis of the reasons for delisting in a cost-saving perspective leads us to define two different levels of delisting. In the case of a voluntary delisting, firms are facing an increase in listing costs and decide to opt out of the stock exchange in order to avoid these costs. In the case of an involuntary delisting, firms are no longer able to manage their costs and forced to delist. Involuntary delisting can thus be viewed as a different level from voluntary delisting. These differences suggest that it is relevant to consider the economic consequences type of delisting, and this paper also addresses this issue. Lastly, we identify some gaps in the delisting literature and other ambiguities and contrasting results, and we suggest a research agenda for more in-depth study of delisting heterogeneity.

Keywords: Delisting, Going private, IPO survival, Corporate governance, Cost-benefit analysis

JEL Classification: G34

Suggested Citation

Martinez, Isabelle and Serve, Stephanie and Djama, Constant, Reasons for Delisting and Consequences: A Literature Review and Research Agenda (April 7, 2015). Available at SSRN: https://ssrn.com/abstract=2591449 or http://dx.doi.org/10.2139/ssrn.2591449

Isabelle Martinez

University of Toulouse - Paul Sabatier; LGC ( email )

118 Route de Narbonne
Toulouse cedex 9, F-31062
France

Stephanie Serve (Contact Author)

University of Cergy-Pontoise - THEMA ( email )

33 bd du Port
Cergy Pontoise, 95011
France

HOME PAGE: http://www.u-cergy.fr/rubrique775.html

Constant Djama

University of Toulouse 1 ( email )

Place Anatole France
Toulouse Cedex, F-31042
France

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