Abstract
Prior research provides scant and mixed evidence on the role of accounting-based metrics in regulating the quality of newly listed firms. This study documents based on a large sample of newly listed high-technology firms from 31 countries during 1995-2000 that profitability, but not firm size, leverage or liquidity, is robustly associated with a firm’s propensity to delist. The setting of a minimum threshold level, however, requires a regulator to make a trade-off between investor protection and facilitating access to new capital for emerging firms. Nevertheless, investors seem to price-protect against a firm’s propensity to delist at least under some conditions irrespective of the institutional setting.
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