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Why do firms down-list or exit from securities markets? : evidence from the German stock exchange

  • In 2003, the German Stock Exchange instituted the Prime Standard as the highest regulated stock market segment in Germany. We analyze the firms’ delisting decisions from this market segment between 2003 and 2015, with a focus on different delisting reasons and firm characteristics. We identify 518 firms that listed on the Prime Standard at least once during the sample period of which 243 firms left this market segment. Of these firms, 107 down-listed and transferred to lower market segments and 136 firms exited the public equity market for the following reasons: 61 firms merged, 53 were insolvent, and 22 firms went private. Using cross-sectional and firm-fixed effects logit regressions, we provide new evidence for firms’ market segment and delisting decisions. Consistent with a cost–benefit analysis, we observe that inferior growth opportunities, low stock liquidity, smaller firm size, poor operating performance, higher audit fees, and more agency conflicts increase the probability that firms opt for a less regulated stock market segment or voluntarily go private. This raises the important issue of securities market reforms that best meet firms and investors preferences.

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Document Type:Article
Author:Wolfgang Bessler, Johannes Ottmar Beyenbach, Marc Steffen RappORCiD, Marco Vendrasco
Center:Center for Corporate Governance (CCG)
Parent Title (English):Review of managerial science : RMS
Year of Completion:2023
First Page:1175
Last Page:1211
Date of first Publication:2022/06/14
Tag:Capital market regulation; Corporate governance; Delisting; Down-listing; Going private; Securities market organization
Content Focus:Academic Audience
Peer Reviewed:Yes
Rankings:AJG Ranking / 2
VHB Ranking / B
SJR Ranking / Q1
Licence (German):License LogoCreative Commons - CC BY - Namensnennung 4.0 International