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Why do companies delist voluntarily from the Stock Market?

Pour, Elinaz Kasefi and Lasfer, Meziane (2013) Why do companies delist voluntarily from the Stock Market? Discussion Paper. University of Birmingham, Birmingham.

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Abstract

We analyse the motives and market valuation of various forms of stock market delisting. We show that firms that delist voluntarily are likely to have come to the market to rebalance their leverage rather than to finance their growth opportunities. During their public life, their leverage remained very high, they could not raise equity capital, and their profitability, growth opportunities, and trading volume declined substantially. Their stock prices decrease significantly on and before the announcement date. These results hold even after controlling for agency, asymmetric information, and liquidity effects, and suggest that firms delist voluntarily when they fail to benefit from listing.

Type of Work:Monograph (Discussion Paper)
School/Faculty:Colleges (2008 onwards) > College of Social Sciences
Number of Pages:49
Department:Birmingham Business School
Series/Collection Name:Birmingham Business School Discussion Paper Series
Keywords:Small firms; AIM; London Stock Exchange; Leverage; Delisting; IPO; JEL classification: G14, G32
Subjects:H Social Sciences > HF Commerce
Copyright Status:This discussion paper is copyright of the University, the author and/or third parties. The intellectual property rights in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this paper must be in accordance with that legislation and must be properly acknowledged. Copies of the paper may be distributed and quotations used for research and study purposes, with due attribution. However, commercial distribution or reproduction in any format is prohibited without the permission of the copyright holder.
ID Code:1725

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