I.P.O. Determinants of Delisting: Lessons From the Athens Stock Exchange

Abstract

Stock delisting is a commonly value destructive process imposing significant costs on investors, firms and public markets. A relatively recent surge in the number of delistings across international markets restates the question on the roots and causes of delisting. Using a hand-picked sample from the Athens Stock Exchange we investigate early warning signs of delisting manifested prior or on the day of the Initial Public Offering. Controlling for other factors, through a propensity score methodology, we find that the probability of delisting is positively associated with relative size issuance and earnings’ manipulation, and negatively associated with hot-issuance periods and the joint effect of audit quality and amount of information divulged through I.P.O. prospectus. In distinguishing between alternative cases of delisting, we find that the effects of audit quality, relative size offer and earnings’ manipulation are further accentuated for voluntary delisted firms. Our results are useful to regulators aiming at reversing the ongoing “listing gap”, not least, in the grossly under-researched Greek market.