The Impact of Exchange Listing on Corporate Governance: Evidence from Direct Listings*
58 Pages Posted: 12 Jun 2018 Last revised: 4 Feb 2020
Date Written: February 3, 2020
Direct listing offers a new, but unproven method of going public for industrial firms. We use prior direct listings by public non-listed REITs (PNLRs) as laboratory to explore the impact of exchange membership on the corporate governance resulting from these transactions. To that end, we examine companies with publicly owned, but non-listed shares in a unique setting where the impacts of listing are distinct from the confounding effect of capital raising inherent in a traditional IPO. Our evidence suggests that younger, more profitable PNLRs with better governance and professional management are more likely to directly list. Moreover, we find that internal corporate governance improves beyond the exchange’s requirements upon
listing. The data indicates institutional ownership increases following the listing and we confirm these changes are not due capital raising.
Keywords: direct listing, exchange listing, corporate governance, IPO, REIT, PNLR
JEL Classification: G23, G32, G34
Suggested Citation: Suggested Citation