Why do listed companies delist themselves voluntarily?

Abstract

Purpose This study aims to analyse, from a corporate finance and governance perspective, the reasons why managers decide to delist their companies from a stock exchange. On the basis of the five hypotheses of voluntary delisting, this study examines why listed companies delist themselves voluntarily in the construction and real estate sectors. Design/methodology/approach By using actual data to examine contractors and real estate companies listed on the Tokyo Stock Exchange between 2004 and 2014, this study analyses whether these companies delist themselves voluntarily. The pooled binary logit model is used as the statistical method. Findings In both the construction and real estate sectors, the concentration of shareholders has a significantly positive effect on voluntary delisting, thus supporting the transfer of wealth effect hypothesis. In construction, market capitalisation has a significantly negative effect on voluntary delisting, thus supporting the maintenance cost reduction hypothesis. In the real estate sector, the ratio of market capitalisation to total assets has a significantly negative effect on voluntary delisting, thus supporting the undervalue elimination hypothesis. Originality/value By comparing the construction and real estate sectors, this study reveals both unique and common reasons for voluntary delisting in each sector. It also offers valuable insights to managers, regulators setting standards in securities markets and investors.

Motivations and Compliance of China-Based Companies Listed Overseas: Evidence from the Australian Securities Exchange

“…In the study on the listing of companies on the Tokyo Stock Exchange, Konno and Itoh (2018) identify three main reasons for delisting behaviour in recent years. The reasons include delisting for substantial failures such as bankruptcy, liquidation, and discontinuity of business; voluntary delisting, which is decided after management buyouts (MBOs); or Mergers and Acquisitions (M&As) and later opting to go private; and involuntary delisting, whereby companies are forced to delist due to a serious warning from the listing office.…”