The Timing of Voluntary Delisting

68 Pages Posted: 13 Jan 2020 Last revised: 22 Apr 2021

See all articles by Alcino Azevedo

Alcino Azevedo

Aston Business School

Gonul Colak

Hanken School of Economics

Izidin El Kalak

Cardiff Business School

Radu Tunaru

University of Sussex

Date Written: April 21, 2021

Abstract

We model a firm’s optimal time to voluntarily delist from an exchange. Three key parameters determine optimal delisting time: firm’s growth rate and business risk combined with total costs associated with staying public. Our hazard rate estimations confirm that the aforementioned key variables are significant drivers of delisting time. Rising political and regulatory uncertainty are two channels through which these parameters get shocked, which changes the optimality of delisting. After classifying firms into ones that took an optimal versus those that took a non- optimal decision to delist, we show that stock market reacts differently to each type of delisting announcement.

Keywords: Voluntary Delisting; Delist Timing; Political Uncertainty, Real Options; Survival Analysis.

JEL Classification: G32, G34, G38, G81

Suggested Citation

Azevedo, Alcino and Colak, Gonul and El Kalak, Izidin and Tunaru, Radu, The Timing of Voluntary Delisting (April 21, 2021). Available at SSRN: https://ssrn.com/abstract=3508939 or http://dx.doi.org/10.2139/ssrn.3508939

Alcino Azevedo

Aston Business School ( email )

Econ., Finance & Enterpreneurship
Aston Business School
Birmingham, B4 7ET
United Kingdom

Gonul Colak

Hanken School of Economics ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland

Izidin El Kalak (Contact Author)

Cardiff Business School ( email )

Aberconway Building
Colum Drive
Cardiff, CF10 3EU
United Kingdom

Radu Tunaru

University of Sussex ( email )

Jubilee
Brighton, BN1 9SL
United Kingdom

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