Voluntary Delisting Research Articles

The timing of voluntary delisting

For many firms, voluntarily delisting from a stock exchange can be optimal. We model an entrepreneur's incentives to voluntarily delist the firm as a trade-off between consumption of private benefits when listed and expected improvements in the firm's performance after delisting. Our model allows for heterogeneity across firms and countries, and various micro and macro shocks affect the delisting decision. Such a model makes novel predictions regarding the delisting patterns around the world. We empirically confirm these predictions using manually collected delisting data from 26 countries. Increasing policy and regulatory uncertainties can partially explain the greater popularity of voluntary delistings.

Legal Protection for Minority Shareholders Arising from the Delisting of Issuer Shares (A Comparative Study of Indonesian, United States, and Singapore Law)

This research paper provides a comparative analysis of the legal frameworks governing the delisting of issuer shares in Indonesia, the United States, and Singapore. Using a normative legal research approach, supplemented by interviews with members of the Financial Services Authority (OJK) and a Member of the House of Representatives Commission XI, the study explores how each jurisdiction addresses the delisting process, particularly focusing on the protection of minority shareholders . The analysis reveals that Indonesia's legal system, influenced by its Civil Law heritage, contrasts with the Common Law approaches of the US and Singapore, especially in terms of shareholder involvement in voluntary delisting and the specificity of conditions for forced delisting. The study suggests enhancements to the Indonesian framework, such as clearer guidelines for shareholder approval in delisting decisions and more transparent criteria for forced delisting. These recommendations aim to improve the protection of minority shareholders within Indonesia's Capital Market.

Balancing Business Objectives and Shareholders’ Rights in Voluntary Delisting: a Comparative Analysis of Selected Legal Jurisdictions

Delisting a company from the stock market often negatively affects the interests of all related parties. For shareholders, the main detriment is their loss of the ability to trade and sell their shares on the open stock market. As voluntary delistings become a more prevalent market phenomenon worldwide, countries are seeking to implement regulatory protections during the process. The aim of this paper is to make a comparative analysis of the protection of shareholders during delisting across multiple jurisdictions including the United States, the UK, Germany, India, and Thailand that have adopted different regimes for protecting shareholders during a company’s voluntary delisting. The goal is to answer the question of which shareholder protection instruments in the covered jurisdictions have adopted to protect shareholder and company interests during delisting, and also to question the effectiveness of investor protection in voluntary delisting. The paper offers potential ways to better protect the rights of shareholders during the voluntary delisting process to achieve a balanced regulation of different corporate actors’ interests.

Voluntary Delisting of Russian Companies at Different Stages of Corporate Life Cycle

Nowadays, the number of companies leaving the stock exchange is steadily increasing. Researchers and practitioners continue to actively discuss the reasons for voluntary delisting and explore the factors that influence the probability of it. However, the results of existing studies are heterogeneous and inconclusive, indicating the need for further research. Thispaper continues the line of research on the determinants of voluntary delisting by studying the delisting of Russian companies. Unlike previous studies, we identify and compare the factors that influence the decision to delist at different stages of the organization’s life cycle. We argue that delisting factors, although specific to each company, should remain similar for firms at the same stage of development. The company-related factors that we test include investment expenditures, profitability, stock volatility and book-to-market ratio. The study is based on a sample of 162 public Russian companies traded on the Moscow Exchange, of which 75 delisted between 2011 and 2019. The Bloomberg database was used to generate the sample of companies. Using the panel probit regression model, we found that firms with greater investment expenditures are less likely to delist at the Introduction and more likely at the Maturity and Decline stages. The results of our research also show that firm stock volatility had a positive effect on the delisting probability of Russian firms at all stages of theirlife cycle, except for the Introduction stage. Finally, we demonstrate that companies at the Introduction and Growth stages are more likely to leave the stock exchange if they have a greater book-to-market ratio. The results of our study can be used by financial analysts and academics to analyze the probability of delisting of public companies at different life cycle stages.

Voluntary delisting and economic performance: evidence for brazilian companies

Voluntary delisting and economic performance: evidence for brazilian companies

What does Voluntary Delisting Tell us about Corporate Governance in Kuwait?

Abstract Despite the adoption of the mixed approach in the application of corporate governance (CG), largely based on the ‘comply or explain’ principle, the Kuwaiti corporate governance system still faces major limitations that have become particularly noticeable from the event of voluntary delisting by a slew of companies after the new Kuwaiti Code of Corporate Governance (KCCG) came into force in 2016. One apparent limitation is caused by the widespread culture of non-compliance, an observation supported by the Capital Market Authority Report on Voluntary Delisting from 2010 to 2016. Empirical analysis was conducted on a sample of 29 companies, all of which were delisted during application of the new KCCG of 2015 until April 2020. This voluntary delisting also indicates other salient limitations such as deficiencies in the CG legal framework, the asymmetrical concentration of share ownership in the hands of larger shareholders, and the passivity of shareholders in Kuwaiti-listed shareholding companies.

Defining the Relationship Between Firm’s Performance and Delisting: Empirical Evidence of Going Private in Europe

One of the reasons why a firm chooses to go private is the significant amount of cash flows which can exacerbate agency costs: this can indicate poor growth opportunities and make external resources less required. In line with both knowledge economy and financial literature, the paper aims to indagate the relationship between agency costs, firm’s performance, and delisting. Despite there is evidence in finance that highlights the role of exchange regulators in the going private processes, just few studies focus on the voluntary delisting and its antecedents. Starting from the knowledge economy setting, this paper aims to define how firm’s financial performance moderates the relationship between agency costs and delisting choices. Based on a sample of non-financial firms delisted from the most important European stock markets between 1997 and 2017, we applied an OLS regression to analyze the main variables that influence the going private processes. We find that a high level of stock market performance, associated with high level of free cash flows, promotes going private as a means of anticipating and preventing future value decreases. Finally, the paper provides practical implications for the development of new approach of delisting choice.

Transformation of the Legal Regulation Mode of Delisting from the STAR Market under the Registration System : Focus on the Proper Protection of Investors

Delisting is an important basic system in the capital market. The registration-based IPO reform on the STAR Market provides an unprecedented historical opportunity for the reform of delisting regime. Listing creates the civil legal relationship between the issuer and the Shanghai Stock Exchange (SSE) while delisting eliminates the relationship. Specifically, the legal attribute of voluntary delisting is the termination of agreement, while mandatory delisting is the practice of agreed termination right. Delisting will have two legal effects: On the one hand, the stock of the issuer will lose the possibility of continuing to trade in the STAR Market and therefore the issuer has no subsequent obligations to obey the self-discipline management rules of the SSE; on the other hand, the stock held by investors will lose the high liquidity and tradability in the STAR Market beneficial from the listing. Consequently, investors will suffer a severe economic loss due to the delisting. The current laws and regulations expose serious distortions in the regulatory concept and deviations in the regulatory path, leading to the alienation of investor empowerment regulations in voluntary delisting into an obstructive delisting system, while efficiency-oriented regulations in mandatory delisting makes investors the undertaker of the delisting loss. In order to build a market-oriented, legalized and normalized delisting system under the background of the registration-based system, the concept and path of legal regulations for the delisting in the STAR Market need to be shifted and upgraded. In terms of voluntary delisting, the investor compensation concept can balance the interest conflicts between company autonomy and investor protection as well as satisfy investors’ requirements for being protected in an individually targeted manner. So, a shift from the investor empowerment mode to the investor compensation mode is needed. As for system construction, it is advisable to learn from the experience of Germen law, which paves a specific regulatory path with the mandatory bid rule (MBR). In terms of mandatory delisting, consideration of the fairness concept can handle the relationship between efficiency interests, public interests and private interests. Therefore, it is necessary to promote the transformation of regulatory concept from efficiency-oriented to fairness-oriented. In terms of system construction, it is appropriate to build a conventional and efficient relief system for the damage of delisting investors, which is mainly based on non-litigation procedures such as compensation in advance and order to buy back, supplemented by litigation procedures such as representative litigation. The China Securities Regulatory Commission (CSRC) is expected to take the STAR Market as a pilot to formulate the delisting reform and introduce the reformed regulatory concept and path of the STAR Market in relevant regulations. Accordingly, the SSE should adjust the delisting regime in Rules Governing the Listing of Stocks on the Science and Technology Innovation Board of Shanghai Stock Exchange (Rules). After the transformation of the delisting regulation mode of the STAR Market, the experience should be extended as soon as possible to other sectors of the capital market including the main board.

Tender offers and takeover bids in Italy from 2007 to 2019. Empirical evidence and discussion points

This paper aims at providing a description of the impact of the Takeover Directive on the Italian capi-tal market by presenting an analysis of the tender offers and takeover bids launched in Italy in the period between 2007 and 2019. After a brief historical excursus on the genesis and evolution of the European and Italian frameworks, the study focuses on the characteristics of the participants in the offers and of the advisors who assist them; on the purposes for which takeover bids are promoted in Italy, with particular attention to the phenomenon of delisting; on the premiums, the acceptance rates, and the market performance of the target securities. The survey, based on a proprietary database of over 20,000 data, although it covers all the offers launched in the period, focuses particularly on offers concerning shares. It shows that less than half of all those offers involve a change of control and only a small minority are hostile offers. In most cases, the offers included a delisting program, either as their own purpose (voluntary delisting offers launched by the controlling share-holder) or as an objective associated with the acquisition/change of control. The data show a recent upward trend in the incidence of delisting, which has gone from 50% to 90% in the last 5 years of analysis. These data seem interesting not because of their absolute value, but in consideration of the increased average size of the companies whose shares have been delisted and, secondly, of the circumstance that this tendency to delist occurred in a market phase that was essentially not negative. The average premium paid to shareholders is approximately 13%, with higher values in offers aimed at a business combination and in voluntary offers. The returns, both absolute and relative to the index, of the target shares are on average negative in the 12/36 months following the bid. Notably, the relative return is equal to -5.9% after 12 months and -6.8% after 3 years. Differentiating the results on the basis of the voluntary or mandatory nature of the offers, it can be seen that all the ex-post return configurations are significantly lower in the case of mandatory offers. Without pretending to draw policy considerations or prospects for reform of the current regulations, the study proposes an analytical and objective framework that leaves, at the disposal of scholars, regulators and market operators, evidence potentially suitable for generating future research contributions.

Determinantes da deslistagem no Brasil: a estrutura de propriedade e controle influencia o fechamento de capital das firmas?

Este trabalho investigou a relação entre deslistagem voluntária e estrutura de propriedade/controle, em especial se as estruturas piramidais de controle impactam na probabilidade de deslistagem no Brasil. A amostra do estudo envolveu todas as empresas listadas na B3 no período de 2012 a 2017, período em que foram registradas 153 deslistagens voluntárias no país. O método selecionado foi a regressão logística, dado que a variável dependente – deslistagem voluntária – é binária. Como principais resultados, constatou-se uma relação negativa entre deslistagem e tamanho da firma e entre deslistagem e liquidez da ação. Por sua vez, detectou-se relação positiva entre fechamento de capital e disponibilidade de caixa. Entretanto, não se observaram efeitos significativos entre deslistagem e estrutura de propriedade e controle para as firmas brasileiras.
 
 Palavras-Chave: Deslistagem Voluntária, Estrutura de Propriedade e Controle, Estrutura Piramidal.

자발적 상장폐지와 소수파주주의 재산권 보호

우리나라의 법제상 자발적 상장폐지에 관하여는 상법에서는 명문규정이 없고 자본시장법을 통하여 한국거래소에 위임하는 규정을 두고 있다(자본시장법 제390조 제2항). 한국거래소는 ｢유가증권시장 상장규정｣과 ｢코스닥시장 상장규정｣을 제정하여 상장폐지를 규율하고 있다. 이 논문에서는 우선적으로 유가증권시장에 상장된(listing) 회사들이 자발적 상장폐지를 하는 이유와 그러한 회사들의 특징을 살펴보고, 우리나라와 각국의 입법례를 분석한 후 소수파주주의 재산권 보호에 관한 법리를 고찰한 후 입법론을 제시하여 보았다.<BR> 고찰의 결과 현재 우리나라에서의 자발적 상장폐지에 관한 사례 및 법제의 상황은 1970년대 이후의 미국, 1980년대 중반이후의 영국, 또는 2013년 독일연방대법원의 결정 후의 독일의 상황과 유사하다. 이러한 상태를 방치하게 되면, 증권발행인의 대주주나 최대주주 등의 필요에 따라 상장신청 및 상장폐지를 반복함으로써, 향후에는 더욱 더 소수파주주의 재산권이 침해될 가능성이 높을 것으로 전망된다. 그러므로 외국과 같이 입법정책적으로 상장폐지 된 회사의 소수파주주의 재산권을 보호하는 수단을 마련하여야 한다. 그리고 소수파주주의 재산권보호에 관한 구체적인 규정은 자본시장법으로 도입을 하고, 그 기초법리는 현재와 같이 회사법에서 구하도록 함으로써 현재와 같은 상황을 입법적으로 해결하는 것이 바람직할 것으로 보인다. 이 논문에서는 소수파주주의 재산권 보호에 도움이 되는 입법론으로서 ① 회사법상 관련규정도입의 필요성, ② 주식매수청구권 및 매입가격산정, ③ 정보공시, ④ 지배주주의 충실의무에 관한 명문규정의 필요성, ⑤ 특별위원회의 설치, ⑥ 주주총회결의시 계약형투자신탁의 수익자의 의결권 행사허용에 관한 내용을 검토하고 제언을 하였다.

The Timing of Voluntary Delisting

We model a firm’s optimal time to voluntarily delist from an exchange. Three key parameters determine optimal delisting time: firm’s growth rate and business risk combined with total costs associated with staying public. Our hazard rate estimations confirm that the aforementioned key variables are significant drivers of delisting time. Rising political and regulatory uncertainty are two channels through which these parameters get shocked, which changes the optimality of delisting. After classifying firms into ones that took an optimal versus those that took a non- optimal decision to delist, we show that stock market reacts differently to each type of delisting announcement.

Can DuPont Analysis Predict Voluntary Delisting from Stock Exchange? Evidence from Pakistan

This study explores whether voluntary delisting of companies from stock exchanges can be predicted by the DuPont Model. ROE (Return on Equity), NPM (Net Profit Margin), ATO (Assets Turnover) and LM (Leverage Multiplier) of 13 voluntarily delisted firms from Karachi Stock Exchange were compared with same ratios of respective sectors for 6 years preceding the delistment year by applying t-test. Difference of means of DuPont ratios between voluntarily delisted firms and their respective sectors were not found statistically significant. Thus, ROE, NPM, ATO and LM, which are the measures of profitability, asset utilization (efficiency) and leverage respectively, are not the significant predictors of voluntary delisting decisions in Pakistan. To the best of researchers knowledge, this study is first attempt to differentiate between voluntarily delisted and listed companies on the basis of DuPont Model.

Intangible investments and voluntary delisting

PurposeDrawing on a cost–benefit perspective, this paper aims to explore the relation between information asymmetry and the decision to delist from stock exchanges during periods of uncertainty. Specifically, it investigates the role of firms’ intangible investments and the availability of alternative sources of finance on the decision to delist from foreign stock markets.Design/methodology/approachThe study takes advantage of a natural experiment in which cross-listed Chinese firms facing uncertainty in US markets because of widespread allegations of accounting fraud decide on whether to remain listed or voluntarily delist. The decision to delist is modelled as a function of the level of information asymmetry between firms and their stakeholders and the availability of alternative financing, while controlling for other drivers of firms’ delisting decision. The data used in the empirical analyses cover a hand-collected sample of 91 Chinese firms voluntarily delisting from US stock markets between 2010 and 2016. This sample is matched with an equal sample of Chinese firms, which remained listed in US stock markets during the same period. A probit regression model accounting for fixed effects is used.FindingsThere is a significant positive relationship between investments in intangible assets and firms’ decision to delist. Moreover, the positive intangibles−delisting nexus is accentuated by the availability of alternative sources of financing. Collectively, the results are consistent with the theoretical argument that the higher information asymmetry associated with intangible assets may increase the cost of staying listed on stock exchanges, particularly in periods of uncertainty (captured in this study by accounting fraud allegations targeting cross-listed firms). The results have important implications for corporate managers, capital market participants and policymakers.Practical implicationsPolicymakers and standard setters must continue to work to improve the accounting regulations of intangible assets and to promote the adoption of global accounting standard across both emerging and advanced economies.Originality/valueThe study exploits a unique natural experimental setting to explore why cross-listed firms delist. The underlying theoretical framework to explain delisting is new. This framework captures the role of information asymmetry, uncertainty and alternative financing in explaining the cost and benefits of remaining listed on a foreign market.

Is It a Curse or a Blessing for a Distressed Public Company to Go Private Voluntarily?

We establish a search based model to investigate the impact of the delisting risk on the distressed public company’s going private decision. We distinguish between two types of going private: voluntary delisting and involuntary delisting. Our simulation results show that there exists a tight link between them. Our model indicates that for any distressed public company, selling its entire equity voluntarily to a private equity fund at a price higher than its reservation price should not be considered as a curse, but rather as a blessing when compared to the worse scenario of being delisted involuntarily by the stock exchange.

ANALISIS KOMPARATIF EARNINGS MANAGEMENT PADA PERUSAHAAN FORCED DAN VOLUNTARY DELISTING PADA BURSA EFEK INDONESIA

From 2005 until early 2015, as many as 52 companies perform delisting. Meanwhile, the practice of earnings management will be found on all companies including the delisted companies. Previously earnings management are found on discretionary accruals, but because it is often used and can be detected easily managers began to switch to manipulate earnings through operating activities or real activities manipulation. The purpose of this study is to analyze the practices of earnings management through real activities manipulation in companies that perform forced and voluntary delisting. Obtained each of 14 companies forced and voluntary delisting during observation from 2005 to 2014 who meet the criteria of purposive sampling. The results using independent t-test found there were no difference in the average earnings management in forced and voluntary delisting companies, which in both earnings management done to lower profits. It is analyzed as the company's goals for the restructuring of debt, save on tax payments as well as the distribution of dividends and employee bonuses. Thus, earnings management to do more to efficient contracting perspective

Why do listed companies delist themselves voluntarily?

PurposeThis study aims to analyse, from a corporate finance and governance perspective, the reasons why managers decide to delist their companies from a stock exchange. On the basis of the five hypotheses of voluntary delisting, this study examines why listed companies delist themselves voluntarily in the construction and real estate sectors.Design/methodology/approachBy using actual data to examine contractors and real estate companies listed on the Tokyo Stock Exchange between 2004 and 2014, this study analyses whether these companies delist themselves voluntarily. The pooled binary logit model is used as the statistical method.FindingsIn both the construction and real estate sectors, the concentration of shareholders has a significantly positive effect on voluntary delisting, thus supporting the transfer of wealth effect hypothesis. In construction, market capitalisation has a significantly negative effect on voluntary delisting, thus supporting the maintenance cost reduction hypothesis. In the real estate sector, the ratio of market capitalisation to total assets has a significantly negative effect on voluntary delisting, thus supporting the undervalue elimination hypothesis.Originality/valueBy comparing the construction and real estate sectors, this study reveals both unique and common reasons for voluntary delisting in each sector. It also offers valuable insights to managers, regulators setting standards in securities markets and investors.

Voluntary Delisting In Korea: Causes And Impact On Company Performance

This research investigates the attributes of firms that choose to voluntarily delist in Korea, including the evolution of firms after delisting, using performance indicators such as total assets, revenue, and net income. Empirical evidence suggests that the higher the shareholding ratio of the largest shareholder and the higher the growth prospects and liquidity, the greater the incentive for voluntary delisting. In addition, firms in non-high-tech industries choose to delist more often than those in high-tech industries. Further, firms that have delisted show lower total assets, revenues, and net incomes than listed firms, and these gaps increase over time.

ANALISIS KOMPARATIF EARNINGS MANAGEMENT PADA PERUSAHAAN FORCED DAN VOLUNTARY DELISTING PADA BURSA EFEK INDONESIA

From 2005 until early 2015, as many as 52 companies perform delisting. Meanwhile, the practice of earnings management will be found on all companies including the delisted companies. Previously earnings management are found on discretionary accruals, but because it is often used and can be detected easily managers began to switch to manipulate earnings through operating activities or real activities manipulation. The purpose of this study is to analyze the practices of earnings management through real activities manipulation in companies that perform forced and voluntary delisting. Obtained each of 14 companies forced and voluntary delisting during observation from 2005 to 2014 who meet the criteria of purposive sampling. The results using independent t-test found there were no difference in the average earnings management in forced and voluntary delisting companies, which in both earnings management done to lower profits. It is analyzed as the company's goals for the restructuring of debt, save on tax payments as well as the distribution of dividends and employee bonuses. Thus, earnings management to do more to efficient contracting perspective.

REASONS FOR DELISTING AND CONSEQUENCES: A LITERATURE REVIEW AND RESEARCH AGENDA

AbstractThis paper discusses the literature on delisting, drawing on USA and international evidence. Given the great heterogeneity in delisting operations, we first consider the standard existing typology based on the initiator of the delisting (the stock market authorities, or the firm itself). Second, while managers often cite high compliance costs (especially due to Sarbanes–Oxley Act implementation) as the official reason for the voluntary delisting of their firm, we highlight that firms face different trade‐offs in their delisting decision. We also examine the reasons for involuntary delisting, especially the delisting dilemma faced by stock market authorities when the firm violates the listing requirements. Next, we review the economic consequences of delisting in terms of value creation or value destruction for shareholders. Finally, noting gaps in the literature and other contrasting results, we propose suggestions for future research.