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2018 | OriginalPaper | Chapter

3. The Decision to Delist: International Empirical Evidence

Author : Barbara Fidanza

Published in: The Decision to Delist from the Stock Market

Publisher: Springer International Publishing

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Abstract

This chapter reviews the empirical literature. There are essentially three streams of empirical literature on delisting. The first one studies, in voluntary delisting, the link between the decision to undertake the operation and the determinants in accordance with the different theoretical models. The other two literature streams highlight the reasons that lead to involuntary delisting and study the effects of delisting on firm value. Except for company size, ex-ante performance and company age, other variables do not show clear-cut results. Small firms, firms with poor ex-ante performance, and young firms are more likely to go private. In terms of value effect, voluntary delisting increases shareholders’ wealth, whereas involuntary delisting leads to value destruction.

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previous chapter Leveraged Buyouts, Going Dark and the Change of the Trading Venue
next chapter Voluntary Delisting and Agency Costs: The Case of the London Stock Exchange
Footnotes
1
Directive on takeover bids (Directive 2004/25/EC of the European Parliament and the Council of 21 April 2004).
 
2
Quoted spread is the average daily closing ask-closing bid divided by the closing mid-quote.
 
3
Most studies rely on these models to estimate normal returns: (a) index model; (b) comparison period return approach; (c) market model; (d) CAPM; (e) control portfolio model.
 
4
The momentum strategy assumes that stocks with good performance in the past will have the same results in the future and vice versa. The strategy is therefore to buy stocks that have been highly profitable over the past 9–12 months and sell those with low performance.
 
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Metadata
Title
The Decision to Delist: International Empirical Evidence
Author
Barbara Fidanza
Copyright Year
2018
Book
The Decision to Delist from the Stock Market

Print ISBN: 978-3-319-95048-8

Electronic ISBN: 978-3-319-95049-5

Copyright Year: 2018

DOI
https://doi.org/10.1007/978-3-319-95049-5_3