The Impact of Exchange Listing on Corporate Governance: Evidence from Direct Listings

63 Pages Posted: 12 Jun 2018 Last revised: 6 Oct 2022

See all articles by Dan W. French

Dan W. French

Lamar University; University of Missouri at Columbia

Andrew E. Kern

University of Missouri - Trulaske College of Business

Thibaut G. Morillon

Elon University

Adam S. Yore

University of Missouri at Columbia - Department of Finance

Date Written: October 5, 2022

Abstract

We use prior direct listings by public non-listed REITs (PNLRs) to explore the impact of exchange membership on corporate governance. We study companies with public, but non-listed shares in a unique setting where the influence of listing is distinct from the confounding effect of capital raising. Evidence suggests younger, more profitable companies with stronger governance and professional management are more likely to directly list. Institutional ownership increases after listing and these changes are not due to future capital raising. Moreover, internal corporate governance improves beyond the exchange’s requirements, especially for those companies with greater stock liquidity and more institutional ownership.

Keywords: direct listing, exchange listing, corporate governance, bonding hypothesis, REIT, PNLR, IPO

JEL Classification: G23, G32, G34

Suggested Citation

French, Dan W. and Kern, Andrew E. and Morillon, Thibaut and Yore, Adam S., The Impact of Exchange Listing on Corporate Governance: Evidence from Direct Listings (October 5, 2022). Available at SSRN: https://ssrn.com/abstract=3185065 or http://dx.doi.org/10.2139/ssrn.3185065

Dan W. French

Lamar University ( email )

PO Box 10745
Beaumont, TX 77710
United States
409-880-8603 (Phone)

University of Missouri at Columbia ( email )

Columbia, MO Columbia 65211
United States

Andrew E. Kern

University of Missouri - Trulaske College of Business ( email )

403 Cornell Hall
Columbia, MO 65211
United States

Thibaut Morillon

Elon University ( email )

Elon, NC 27244
United States

Adam S. Yore (Contact Author)

University of Missouri at Columbia - Department of Finance ( email )

403 Cornell Hall
Columbia, MO 65211
United States
573-884-1446 (Phone)

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