What drives delistings of foreign firms from U.S. Exchanges? |
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| Authors: | Susan Chaplinsky Latha Ramchand |
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| Institution: | 1. Department of Finance, Ling Tung University of Science and Technology, Taiwan;2. Department of Finance, National Yunlin University of Science and Technology, Taiwan;1. San Francisco State University, USA;2. College of Economics & Academy of Financial Research, Zhejiang University, China;3. National University of Kaohsiung, Taiwan;4. National Kaohsiung First University of Science and Technology, Taiwan;1. School of Business, Jiangnan University, Wuxi, Jiangsu 214122, China;2. F.C. Manning School of Business Administration, Acadia University, Wolfville, NS B4P 2R6, Canada;3. College of Management & Economics, Tianjin University, Tianjin 300072, China;4. Odette School of Business, University of Windsor, Windsor, Ontario N9B 3P4, Canada |
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| Abstract: | We examine time dependency in the factors motivating delistings of foreign firms from major U.S. Exchanges over the period 1962–2006. For firms listing before Sarbanes-Oxley (SOX), we find that governance has no significant effect on delisting but after SOX, it becomes one of the main forces driving delisting. For firms whose delisting decision is most likely attributable to SOX, we find they realize low benefits from listing – they originate from countries with strong home market governance, and from listing onward realize low trading volume, analyst coverage, and make little use of capital raising. Our results suggest that SOX has had a large influence on the benefits seek from a U.S. listing, leading firms from well governed countries and low capital raising needs to delist. |
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