The Shareholder Wealth Effects of Voluntary Foreign Delistings: An Empirical Analysis

Abstract

This study investigates the shareholder wealth effects of voluntary foreign delistings for the first time using a sample of U.S. firms delisted voluntarily from Japan. Using conventional event study methodology, we find no significant price changes following the delisting events, consistent with the voluntary nature of the delistings and the public information nature of the delisting reasons cited, i.e., small number of shareholders and low trading volume for the dually-listed stocks in the host market. Nonetheless, stock prices, on average, do seem to drop gradually over time, in line with possible liquidation of the to-be-delisted stocks around the events.

Keywords: Voluntary foreign delisting, Tokyo stock exchange, price effects

JEL Classification: G12, G14, G15