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Book part
Publication date: 19 September 2014

Silvio Vismara and Andrea Signori

Innovation is a key driver of a firm’s ability to survive in the financial market. Previous studies typically consider a firm dead once its shares are delisted from the stock…

Abstract

Innovation is a key driver of a firm’s ability to survive in the financial market. Previous studies typically consider a firm dead once its shares are delisted from the stock exchange. Despite its negative connotation, delisting may be a strategic decision and therefore be a positive outcome for the company. We study how a firm’s innovative activity, in terms of R&D investments and number of patents, shapes its survival profile, taking into account the heterogeneous nature of delistings. Using a sample of high-tech small and medium enterprises (SMEs) going public in Europe during 1998–2003, we find that more innovative firms, both in terms of patents and R&D investments, have a higher probability to be taken over. However, while firms with a rich portfolio of patents are less likely to voluntarily delist, higher R&D investments increase a firm’s likelihood of being delisted due to compliance failure.

Details

Finance and Strategy
Type: Book
ISBN: 978-1-78350-493-0

Keywords

Executive summary
Publication date: 12 August 2022

CHINA/US: Delistings deepen pessimism over ties

Details

DOI: 10.1108/OXAN-ES272087

ISSN: 2633-304X

Keywords

Geographic
Topical
Article
Publication date: 31 May 2019

Young-Won Her, Jennifer Howard and Myungsoo Son

The purpose of this study is to examine whether the timing of auditor terminations signals the riskiness of client firms.

Abstract

Purpose

The purpose of this study is to examine whether the timing of auditor terminations signals the riskiness of client firms.

Design/methodology/approach

This empirical study uses a sample of auditor switches during 2003-2014 to conduct univariate tests and multivariate regression analyses. Auditor switches occurring after the audit report date but before the shareholders’ meeting are classified as “planned” terminations and auditor switches that occur outside of this window are classified as “abrupt” terminations.

Findings

First, abrupt terminations are more strongly related to client risk factors than planned terminations. Second, relative to planned terminations, abrupt terminations are more likely to result from an auditor resignation rather than a client dismissal. Third, abrupt termination firms are more likely to have internal control weaknesses and experience delistings in the following year. Future operating performance is also worse after an abrupt termination. Finally, auditors and investors view abrupt terminations as riskier than planned terminations.

Practical implications

As the timing of the auditor termination is publicly available information, it can provide an important signal of deteriorating financial performance to shareholders and potential investors. Abrupt terminations could be costly to shareholders because those firms likely have lower quality financial reporting (due to internal control weakness) and deterioration of future operating performance.

Originality/value

While concurrent studies investigate the relation between the timing of new auditor appointment and audit quality, this is the first study to document the relation between the timing of auditor termination and the riskiness of client firms.

Details

Managerial Auditing Journal, vol. 34 no. 6
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 13 August 2018

Jinwoo Park, Kengo Shiroshita, Naili Sun and Yun W. Park

The purpose of this paper is to analyze the wealth effect of involuntary delisting and investigate insider opportunism and the role of corporate governance, liquidity and legal…

Abstract

Purpose

The purpose of this paper is to analyze the wealth effect of involuntary delisting and investigate insider opportunism and the role of corporate governance, liquidity and legal environment in involuntary delisting in Japan’s stock market.

Design/methodology/approach

The authors use a sample of 136 involuntarily delisted firms in Japan’s stock markets between 2002 and 2012. The authors examine ownership changes of inside shareholders prior to delisting and estimate regression models for the wealth effect of involuntary delisting.

Findings

Involuntary delisting is highly disruptive in Japan, and limited liquidity of delisted stocks appears to be an important cause. However, the ownership reduction of inside shareholders before delisting is limited, totaling 2–3 percent. For delisted firms with an insider bank, the decrease in share price leading up to a delisting announcement is much less, while the decrease in share price upon a delisting announcement is far greater.

Originality/value

The study investigates involuntary delisting in regard to the opportunistic behavior of inside shareholders and the role of institutional environment in Japan’s stock market. Insiders, especially insider banks, maintain ownership in a distressful context leading to the forcible delisting of a distressed firm. The authors find some evidence that suggests that the market believes the insider bank will try to prevent the ailing firm’s insolvency. The findings are consistent with the implicit relational contracts that characterize Japanese firms.

Details

Managerial Finance, vol. 44 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 9 January 2017

Ettore Croci, Eric Nowak and Olaf Ehrhardt

The purpose of this paper is to examine minority squeeze-outs and their regulation in Germany, a country where majority shareholders have extensively used this tool since its…

Abstract

Purpose

The purpose of this paper is to examine minority squeeze-outs and their regulation in Germany, a country where majority shareholders have extensively used this tool since its introduction in 2002. Using unique hand-collected data, the authors carry out the first detailed analysis of the German squeeze-out offers from the announcement to the outcome of post-deal litigation, examining also the determinants of the decision to squeeze-out minority investors.

Design/methodology/approach

Using unique data on court rulings and compensations, the authors analyze a sample of 324 squeeze-outs of publicly listed companies from 2002 to 2011 to carry out the first detailed analysis of the squeeze-out procedure and the post-deal litigation. The authors employ the event study methodology to assess the stock market reaction around the announcement of the squeeze-out.

Findings

Large firms with foreign large shareholders are the most likely to be delisted. Positive stock price performance increases the likelihood of a squeeze-out, but operating performance has the opposite effect. Stock prices react positively to squeeze-out announcements, in particular when the squeeze-out does not follow a previous takeover offer. Post-deal litigation is widespread: nearly all squeeze-outs are legally challenged by minority shareholders. Additional cash compensation is larger in appraisal procedures, but actions of avoidance are completed in less time. Overall, the evidence suggests that starting post-deal litigation by challenging the cash compensation offered in a squeeze-out delivers high returns for minority investors.

Research limitations/implications

The lack of data concerning the identity of minority shareholders in firms undergoing a squeeze-out does not allow a proper investigation of the incentives of the different types of investors.

Practical implications

The paper provides evidence about the incentives of the different players in a squeeze-out offer. The findings of the paper could be helpful in assessing the impact of the squeeze-out rule. The results also contribute to the understanding of minority investors’ incentives to start post-deal litigation.

Originality/value

This paper provides new evidence about post-deal litigation, in particular how investors use the procedures that the system provides them to protect themselves against controlling shareholders. The paper examines all the phases of the squeeze-out procedure and challenges.

Details

Managerial Finance, vol. 43 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

Open Access
Article
Publication date: 25 November 2021

Ju Hyun Kim and Kyojik Song

The authors compare the post-issue stock and operating performance of rights issue versus public offer firms using Korean data. The authors find that the stock returns of rights…

Abstract

The authors compare the post-issue stock and operating performance of rights issue versus public offer firms using Korean data. The authors find that the stock returns of rights issue firms are less negative than those of public offering firms during the three years subsequent to the seasoned equity offering. The authors further find that the profitability of rights offering firms is superior to those of public offering firms and that the ratio of sales to assets for rights issue firms is much higher over the post-issue period. The results substantiate Heinkel and Schwartz’s (1986) and Eckbo and Masulis’ (1992) theoretical models that posit firms with better quality tend to select the rights issue rather than public offer method when issuing seasoned equity.

Details

Journal of Derivatives and Quantitative Studies: 선물연구, vol. 30 no. 1
Type: Research Article
ISSN: 1229-988X

Keywords

Article
Publication date: 30 July 2019

Léopold Lessassy

The purpose of this paper is to examine the moderating effect of brand preference and type of shopping trip on the relationship between replacing a delisted national brand (NB…

Abstract

Purpose

The purpose of this paper is to examine the moderating effect of brand preference and type of shopping trip on the relationship between replacing a delisted national brand (NB) with a retailer’s private label (PL) brand (premium vs standard) and private label switching (PLS), that is switching from NB to PL.

Design/methodology/approach

Inside a major French retail chain store, an experiment with 1,392 NB buyers tested the impact of replacing NB with PL on PLS.

Findings

Results stress the positive contribution of PL replacements after NB delisting on buyers’ switching behaviour at different brand preference levels and shopping trip types. A main-choice NB for a major trip shopping benefits a PLS to premium PL. However, when a fill-in shopper looks for a secondary brand, competition between PL standard and NB may not be as weak as suggested in earlier studies.

Research limitations/implications

The limitation of this study is that respondents reported their purchases instead of actually buying.

Practical implications

This study highlights that the retailers that delist some NB brands in the category should adopt a strategy either to develop premium or standard PLs, depending on consumers’ brand preference and shopping trip type.

Social implications

Delisting is an opportunity to question the NB product competitiveness towards PL.

Originality/value

The study is based on actual delisting and replacement, combined with a large sample, unlike previous studies. Moreover, it bridges two important areas of research: conflict in marketing channels and PL introduction in retailers’ assortment decisions.

Details

International Journal of Retail & Distribution Management, vol. 47 no. 10
Type: Research Article
ISSN: 0959-0552

Keywords

Article
Publication date: 14 November 2017

Denisa Hebblethwaite, Andrew G. Parsons and Mark T. Spence

Retailers may respond to a manufacturer discontinuing a brand or product range in three ways: not offering an alternative, thus reducing the assortment size; replacing it with a…

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Abstract

Purpose

Retailers may respond to a manufacturer discontinuing a brand or product range in three ways: not offering an alternative, thus reducing the assortment size; replacing it with a substitute; or introducing a rebranded product by the same manufacturer, if such an option is available. This study aims to evaluate all three scenarios and assess the extent to which total category sales are affected; how these discontinuations affect alternative offerings within the product category; and whether usage levels moderate within category switching behaviour. Shoppers did not have the option of switching stores to acquire the discontinued brand – their preferred brand/product range ceased to exist.

Design/methodology/approach

All three studies are quasi-experiments using scanner panel data. The product discontinuations examined are real events that took place within the major supermarket chain in New Zealand.

Findings

In all the three scenarios, average category sales decreased for the three-month period following the discontinuation. In Study 1, where a preferred brand of milk was discontinued with no replacement, overall category sales decreased but competing brands gained sales; introducing a replacement corn chip range (Study 2) successfully captured the spend on the discontinued range, but other brands lost sales; and rebranding a cereal (Study 3) decreased both brand sales and category sales. With the exception of Study 1, near-substitute product offerings did not capture a greater proportion of the spend from the discontinued brand as compared to less similar substitutes. Expectations were that heavy users would have a greater propensity to shift to near alternatives than would medium/light users; however, none of the studies lend support.

Originality/value

This is the first research effort to use scanner panel data to explore the reactions by brand loyal customers to three different brand discontinuation scenarios initiated by the manufacturer.

Details

European Journal of Marketing, vol. 51 no. 11/12
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 1 February 2004

Johanna Småros and Markus Hellström

The paper presents how a European pick‐and‐mix confectionery company has employed a new forecasting approach – assortment forecasting – to reduce significantly time spent on…

4188

Abstract

The paper presents how a European pick‐and‐mix confectionery company has employed a new forecasting approach – assortment forecasting – to reduce significantly time spent on forecasting by working with an entire assortment at a time instead of producing a forecast for each product individually. The implementation of a less time‐consuming forecasting method has enabled the company to involve its salespeople in forecasting and in this way gain access to their product and market knowledge. The case company's implementation of the new forecasting method is described and its forecasting accuracy and time spent on forecasting before and after the implementation are measured. The results demonstrate a remarkable increase in forecasting efficiency as well as improved communication within the company.

Details

International Journal of Physical Distribution & Logistics Management, vol. 34 no. 2
Type: Research Article
ISSN: 0960-0035

Keywords

Article
Publication date: 21 August 2018

Yukiko Konno and Yuki Itoh

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…

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.

Details

Journal of Financial Management of Property and Construction, vol. 23 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

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