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

58 Pages Posted: 12 Jun 2018 Last revised: 4 Feb 2020

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; University of Missouri at Columbia

Adam S. Yore

University of Missouri at Columbia - Department of Finance

Date Written: February 3, 2020

Abstract

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

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* (February 3, 2020). 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

University of Missouri at Columbia ( email )

332 Cornell Hall
Columbia, MO Columbia 65211
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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