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. University and Cass Business School for their useful comments on the earlier drafts of this paper which was previously circulated with the title "The Impact of Leverage on the Delisting Decision of AIM Companies". All remaining errors are our own responsibility. Keywords 2Why Do Companies Delist Voluntarily from the Stock Market? IntroductionOver the last few years, an increasing number of quoted firms delist from the London's Alternative Investment Market (AIM). The most common method, accounting for nearly half of the delisted firms from AIM, is "at the request of the company", referred to thereafter as voluntary delisting, 1 where firms notify the London Stock Exchange to cancel their trading on the exchange at least 20 days before the actual event, get an approval from no less than 75% of shareholders at a general meeting, and then become private. Their existing shareholders have two options: either sell their shares before the delisting date or remain shareholders in what will become a privately owned company. Unlike other forms of delisting, such as transfer to the more regulated Main market, breach of regulation, takeovers or going private through buyouts, shareholders can still keep their old shares. However, in contrast to US firms that deregister with the SEC to become "dark companies" with their shares traded over-the-counter (OTC) on the Pink Sheets (Marosi andMassoud, 2007 andLeuz et al., 2008), in the UK, the delisted firms' shares remain private and illiquid.The reasons and consequences of such delisting decision remain an open question. In this paper, we contrast the different methods of delisting, focussing particularly on voluntarily delisting. We assess whether firms trade off the costs and benefits of being listed in the stock market when they decide to delist as shown by Maupin et al. (1984), Kaplan 1991) and Bharath and Dittmar (2010) in the case of going private. We test the hypothesis that firms delist voluntarily because they are unable to obtain funding from AIM to rebalance their capital structure, even though this factor is one of the major motivations for IPOs (e.g., Aslan and Kumar, 2011;Bharath and Dittmar, 2010;Kim and Weisbach, 2005;Marosi and Massoud, 2007). We also use hand-collected data from prospectuses to assess the reasons for listing and whether the delisting decision can be pr...
We examine the determinants of capital structure and funding sources of 347 large global banks between 1998 and 2016 from 57 countries around the world. We find that the capital structure of banks does not evolve only as a result of capital regulations, it is also affected by market forces. We find that bank capital structure corresponds to corporate finance theory and buffer view and, in particular, that market‐to‐book ratio, size, and risk are positively related and that profitability is negatively related to bank leverage. Banks in countries with higher tax advantages, creditor rights, deposit insurance, and bankruptcy codes have more leverage, and those bound by common law have less leverage. Size and country‐level factors are important determinants of sources of financing.
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a b s t r a c tThis research examines the impact of a CEO's (Chief Executive Officer) decision-making power on a firm's survival after an initial public offering (IPO), using data from the period 2001-2011 in China. Following the CEO literature which argues that CEO traits are related to a firm's performance, I find that the CEO who has power over the board as a consequence of her/his status as a founder decreases the probability of delisting, whereas her/his status as the board's sole insider and concentration of the title in the hands of the CEO increases the likelihood of delisting. Moreover, the results suggests that firms with higher CEO ownership power, older, more industry experience, and highly educated CEOs, and with those who have the same nationality as the company, are more likely to survive after taking IPOs, but that firms with CEOs who also chair their boards are less likely to survive. The results also show that firms with powerful CEOs generate negative announcement date excess returns.
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