The Impact of Exchange Listing on Corporate Governance: Evidence from Direct Listings
54 Pages Posted: 12 Jun 2018 Last revised: 12 May 2019
Date Written: May 10, 2019
We use transactions by public non-listed REITs (PNLRs) as laboratory to study a new method of going public for industrial firms known as direct exchange listing. We explore the impact of exchange membership on corporate governance by examining companies with publicly owned, but non-listed shares in a setting where the impacts of listing are distinct from the confounding effect of capital raising inherent in a traditional IPO. Our evidence suggests that listing may be used as a quality signaling mechanism for unlisted firms. Moreover, we find that corporate governance improves beyond the exchange’s requirements upon listing. The data indicates institutional ownership increases following 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