Common Stock Delisting: An Empirical Analysis of Firms Performance

Abstract

This work presents an empirical analysis of delisting effects on shareholder wealth in a sample of firms delisted from European stock exchanges. The analysis was conducted at two levels. At the first one, through an event study, the effect on common stock price of delisting, on announcement day and around it is studied. At the second level, it is tested to see if the delisting improved the operating performance in the post-delisting years. The results confirm the main international evidence. The delisting causes the stock price rise in the pre-announcement period and in the few days around the announcement. The leverage and size of the firm are determinants of these effects. Conversely, prices declined in the post-announcement period. The operating performance in the year after delisting does not change much concerning the year before the delisting, but the size remains a determinant.