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

38 Pages Posted: 12 Jun 2017

See all articles by Isabelle Martinez

Isabelle Martinez

University of Toulouse - Paul Sabatier; LGC

Stéphanie Serve

University of Cergy-Pontoise

Date Written: July 2017

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

Suggested Citation

Martinez, Isabelle and Serve, Stéphanie, Reasons for Delisting and Consequences: A Literature Review and Research Agenda (July 2017). Journal of Economic Surveys, Vol. 31, Issue 3, pp. 733-770, 2017. Available at SSRN: https://ssrn.com/abstract=2984370 or http://dx.doi.org/10.1111/joes.12170

Isabelle Martinez (Contact Author)

University of Toulouse - Paul Sabatier; LGC ( email )

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

Stéphanie Serve

University of Cergy-Pontoise

33 Boulevard du Port
Cergy-Pontoise Cedex, Cedex 95011
France

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