The Effects of the Financial Crisis on Delisting Decisions: Evidence from Family and Non-Family Firms in Germany

45 Pages Posted: 3 Dec 2018

See all articles by Wolfgang Bessler

Wolfgang Bessler

Justus-Liebig-University Giessen

Johannes Beyenbach

Handelshochschule Leipzig (HHL) - Center for Corporate Governance

Marc Steffen Rapp

University of Marburg - School of Business & Economics; University of Marburg - Marburg Centre for Institutional Economics (MACIE)

Marco Vendrasco

Justus-Liebig-University Giessen

Date Written: November 20, 2018

Abstract

The global financial crisis significantly affected the viability of the financial system and the structure of equity markets. In this study, we investigate the phenomenon of family and non-family firms’ delisting decisions from the Prime Standard, the highest regulated stock market segment in Germany. We use a sample of 107 family and non-family firms and focus on the delisting decisions for the periods around the financial crises (2003-2015). We use valuation effects as well as logit and firm-fixed effects regressions to provide new evidence why firms leave the highest equity market segments before and subsequent to the crisis. We observe a different behavior for family and non-family firms and the empirical evidence suggests that family firms favor to list in the Prime Standard before the crisis but are more likely to switch to a lower market segment subsequently. We also find that firms changing the market segment underperform prior and subsequent to the crisis, but the order of relative performance between family and non-family firms substantially reverses after the crisis. Firms staying listed on the Prime Standard perform well and possess higher growth opportunities relative to the firms that transfer to a lower market segment. Hence, the firms’ cost-benefit considerations are an im-portant explanation for determining the favored stock market segment and the switch to a less regulated market environment. Most importantly, the financial crisis had a significant effect on firms’ reassessing their initial listing decisions.

Keywords: Securities market organization, corporate governance, regulatory changes, going dark, delisting, family firms, valuation effects

JEL Classification: G14, G18, G30, G32, G39

Suggested Citation

Bessler, Wolfgang and Beyenbach, Johannes and Rapp, Marc Steffen and Vendrasco, Marco, The Effects of the Financial Crisis on Delisting Decisions: Evidence from Family and Non-Family Firms in Germany (November 20, 2018). Available at SSRN: https://ssrn.com/abstract=3288654 or http://dx.doi.org/10.2139/ssrn.3288654

Wolfgang Bessler (Contact Author)

Justus-Liebig-University Giessen ( email )

Center for Finance and Banking
Licher Strasse 74
Giessen, D-35394
Germany
49-641-9922460 (Phone)
49-641-9922469 (Fax)

HOME PAGE: http://wiwi.uni-giessen.de/home/Bessler/

Johannes Beyenbach

Handelshochschule Leipzig (HHL) - Center for Corporate Governance ( email )

Jahnallee 59
Leipzig, 04109
Germany

Marc Steffen Rapp

University of Marburg - School of Business & Economics ( email )

Am Plan 2
Marburg, D-35037
Germany

University of Marburg - Marburg Centre for Institutional Economics (MACIE) ( email )

Am Plan
Marburg, 35032
Germany

Marco Vendrasco

Justus-Liebig-University Giessen ( email )

Licher Strasse 74
Giessen, 35394
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
28
Abstract Views
354
PlumX Metrics