The determinants of involuntary delisting rate in the Egyptian IPO equity market

This 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.

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“…Jiang and Wang, in China; Algebaly et al. , in Egypt) and their results are mainly in line with the findings for developed markets.…”

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confidence: 86%

Reasons for Delisting and Consequences: A Literature Review and Research Agenda

Martínez

Serve

2016

Journal of Economic Surveys

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“…Initial public offering (IPO) survival refers to the extent of time a public corporation remains listed on the stock market [1,2]. The IPO survival comes to an end as it delists from the respective stock market, irrespective of whether delisting occurs voluntarily (e.g., conversion to a private firm, merger and acquisition) [3,4] or involuntary (e.g., forced delisting by court or exchange, financial distress leading to liquidation, hostile merger and acquisition) grounds [5]. Over the last three decades, this question has raised concerns about the sustainable survival of newly listed IPOs in capital markets across the globe [6].…”

Section: Introductionmentioning

confidence: 99%

Predictive Role of Ex Ante Strategic Firm Characteristics for Sustainable Initial Public Offering (IPO) Survival

2021

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This study attempts to predict how long a newly listed corporation, usually termed initial public offering (IPO), will survive on the equity listing market. The three-fold contribution of this study comprises a hand-collected and substantially expanded dataset for listed IPOs (1990–2017) over a maximum tracking period of 31 years (1990–2020) to predict the IPO survival on emerging Malaysian capital market, the rationale and consequences for unifying the two listing boards (Main Board and Second Board) in 2009, and an investigation of the predictive role of ex ante strategic prospectus information as early warning signals for sustainable survival of Malaysian IPOs. We also make comparisons for the survival profile of IPOs listed on different listing equity boards. We use Cox proportional hazard (PH) model to estimate the empirical results because of the cohort research design of the study. Overall empirical results show that survival curves for IPOs listed on Main Board and Second Board were not statistically different. However, Second Board IPOs remained more vulnerable to hazard. The survival curves for IPOs listed on Main Market and ACE Market are statistically different. Empirical results reveal that high share premium, high listed capital, and longer firm age at listing date significantly increase the survival (reduce hazard) of IPOs listed on the Main Market and the Second Board. However, bigger firm size and elevated risk factors significantly reduce the survival (increase hazard) of the listed IPOs mentioned above. However, share premium is the only variable that has a negative and significant correlation with IPO survival on ACE Market. These results have implications for the regulators, prospective investors, and policymakers of emerging markets, where the IPO prospectus disclosures bridge the information asymmetry gap prevailing due to the nonexistence of public information prior to the IPO. Empirical findings of this study can be generalized to other developing and emerging markets where IPO prospectus substantially mitigates information asymmetry and ex ante strategic firm characteristics act as early warning signals in predicting IPO survival.

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“…Based on resource based hypothesis, firms with higher IPO proceeds are expected to survive longer as they are expected to have the required resources for innovation and advertising activities. Jain and Jayaraman (1999), Willenborg and McKeown (2001), Bhabra and Pettway (2003), Boubakri, Kooli, and L'Her (2005), Kooli and Meknassi (2007), and Algebaly et al (2014) found a significant negative relationship between offering size and delisting rate.…”

Section: Delisting In Athens Stock Exchange 353mentioning

confidence: 86%

Delisting in Athens Stock Exchange

Yiannoulis¹

2019

JMAA

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The scope of this paper is to contribute to the question of delisting (both voluntary and involuntary), with particular emphasis on the initial conditions leading up to the Initial Public Offering (IPO) of the firms. The case of Athens Stock Exchange (ASE) is examined, specifically the IPOs of years 1996-2004 and their subsequent performance (delisting or not) till the end of 2017. We find that the probability of delisting is positively associated with the size of the issuance and the degree of earnings' manipulation and negatively associated with audit quality, information transparency, and market timing. The effects of audit quality, size of issuance, and earnings' manipulation are accentuated in instances of voluntary delisting while the effect of market timing is more clearly pronounced in instances of involuntary delisting. Our results are robust to a number of confounding factors including size, profitability, leverage, liquidity, growth options, and corporate governance. Our work is not replication of existing studies; in addition, we choose ASE as in that capital market there were many delistings the last two decades.

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The determinants of involuntary delisting rate in the Egyptian IPO equity market

Cited by 9 publications

References 57 publications

Reasons for Delisting and Consequences: A Literature Review and Research Agenda

Reasons for Delisting and Consequences: A Literature Review and Research Agenda

Predictive Role of Ex Ante Strategic Firm Characteristics for Sustainable Initial Public Offering (IPO) Survival

Delisting in Athens Stock Exchange

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