Delisting and Corporate Governance: A Review and Research Agenda

This review documents the extensive empirical work conducted on delistings and provides a future research agenda. We examine both involuntary and voluntary delisting studies in an international context (Anglo-Saxon vs. continental Europe markets) to better examine the reasons for and the consequences of this phenomenon and to identify the interaction between delisting and corporate governance. The review shows that the decision to go private relies on a cost-benefit trade-off, whereas firms are involuntarily delisted because of a violation of stock exchange requirements and/or poor performance. Furthermore, we identify a strong interaction between delistings and both (1) corporate governance regulations and (2) a firm’s specific corporate governance. We document that value destruction can be expected for involuntary delistings but that whether value creation will occur is questionable when a firm goes private. Finally, our review allows us to summarize what is known and unknown about delisting and to identify a future research agenda.