چه چیزی باعث از لیست خارج شدن شرکت های خارجی از بورس آمریکا می شود؟

We examine time dependency in the factors motivating delistings of foreign firms from major U.S. Exchanges over the period 1962–2006. For firms listing before Sarbanes-Oxley (SOX), we find that governance has no significant effect on delisting but after SOX, it becomes one of the main forces driving delisting. For firms whose delisting decision is most likely attributable to SOX, we find they realize low benefits from listing – they originate from countries with strong home market governance, and from listing onward realize low trading volume, analyst coverage, and make little use of capital raising. Our results suggest that SOX has had a large influence on the benefits seek from a U.S. listing, leading firms from well governed countries and low capital raising needs to delist.

Over the period 1962–2006, there have been 1344 listings and 724 delistings of foreign firms from major U.S. Exchanges. The large number of listings and delistings spanning nearly 50 years suggests there is a long standing dynamic to foreign firms’ entry and exit from the United States. A number of studies have advanced motivations for why foreign firms list in the U.S.2 While not mutually exclusive, these studies note that foreign firms may be motivated to list in the U.S. to gain lower costs of capital associated with more efficient risk sharing (Alexander et al., 1988, Errunza and Losq, 1985 and Errunza and Miller, 2000), greater investor recognition (Merton, 1987), improved access to capital (Lins, Strickland, and Zenner, 2005), improved liquidity (Amihud and Mendelson, 1986; and Brennan and Subrahmanyamet, 1996), improved product market visibility (Pagano et al., 2002), or as a means to credibly commit to stricter U.S. market regulation and the protection of investor rights (Coffee, 1999, Stulz, 1999, Doidge et al., 2004 and Karolyi, 2006). Recently a number of international firms have announced their intentions to delist or deregister (which can follow delisting) from major U.S. Stock Exchanges. These firms often cite, among other reasons, the low U.S. trading volume in their shares, the increased cost and complexity of U.S. capital market regulation, spurred by passage of the Sarbanes-Oxley Act (SOX) in July 2002, and the belief that their home markets can meet their liquidity and capital raising needs. These reasons are, in effect, the “flip side” of some of the reasons advanced for listing and suggest that firms failing to realize net benefits from listing may be motivated to delist from U.S. Exchanges. Firms delist when the expected costs of listing exceed the expected benefits of listing – investor recognition, liquidity, capital raising opportunities, and bonding. As much as entry patterns can inform us of the reasons firms choose to list in the U.S., exit patterns can validate these reasons if the circumstances associated with delisting can be linked to firms not realizing or having little further need for the benefits associated with listing. Firms evaluate the net benefits of listing in a dynamic context where firm, U.S., and home market characteristics have changed over time. Within this context, regulatory shocks such as SOX have increased the costs of listing and served to offset the expected benefits of listing. Over a long period of time, these changes likely influence the net benefits firms perceive to be associated with listing. Our study investigates delistings to determine whether the benefits foreign firms seek from listing depend on when a firm lists, which we refer to as “time dependency” in listing benefits. Ultimately, the benefits firms seek from listing help identify the competitive advantages of the U.S. market compared to other listing venues. To conduct our study, we examine all listings on and delistings of foreign firms from U.S. Exchanges over 1962–2006. Ultimately the firms that remain listed are “survivors,” that sustain listing by being able to gain sufficient acceptance by U.S. investors to generate net benefits from listing, whereas the delisting firms are those less likely to generate net benefits. Because we do not know at listing which firms will delist, our sample includes firms that are forced to delist (involuntary delists), firms that delist because they are acquired or merge with other firms (M&A delists), and firms that voluntarily delist (voluntary delists). 3 Involuntary delistings represent firms that lack some firm-level characteristics necessary to sustain listing. Voluntary delistings help delineate the relative attractiveness of the U.S. vis-à-vis other markets. Both are relevant in understanding firm and market-level factors that influence delistings from U.S. Exchanges. Our analysis of listings uncovers several trends in firm-specific and market characteristics that likely affect the relative advantages of a U.S. listing over time. First, foreign firms listing in 2001–2006 are larger on average in size, less profitable, and have higher asset growth rates compared to the firms listing before 1980. All else equal, the latter two findings suggest that later entrants could have less ability to fund growth from internally generated funds, increasing the importance of capital raising as a motivation for listing. Second, the home markets of the foreign firms listing in the U.S. have developed and improved their governance over time, narrowing the competitive gap between the markets. While the changes in firm and market characteristics have been more gradual in nature, SOX brought about abrupt changes in U.S. disclosure and compliance costs. Although SOX is widely believed to have increased the costs of a U.S. listing, the extent of its impact remains controversial. Leuz (2007) and Leuz and Wysocki (2008) characterize the extant evidence on the impact of SOX as “inconclusive” noting the difficulty of identifying the firms most affected by its provisions. If SOX is a large influence on firms’ perceptions of net benefits then it should alter the value firms’ place on governance. In our context, if the commitment to greater disclosure and protection of investor rights is the main reason firms list in the U.S., then by increasing the costs of compliance, stricter regulations like SOX should lead to the exit of firms that do not value this commitment (i.e., firms from countries with strong governance and investor protection.) To test for time dependency, we estimate a panel logit model of delisting that includes firm specific, market, and governance measures related to the costs and benefits of listing from listing to delisting. An important feature of this framework is that it estimates the probability of delisting conditional on the fact that the firm has not yet delisted and incorporates influences on the decision starting with the year of listing and continuing through the year of delisting. Firms that list before 2002 and delist in or after 2002 encounter an unexpected increase in regulatory costs and are more likely to be “caught off guard (COG)” by SOX.4 Prior studies agree on the fact that the majority of firms voluntarily exiting after SOX are from developed market countries but disagree on the effect that home market governance has on exit.5 For example, Witmer (2006), Marosi and Massoud (2008) and Hostak et al. (in press) find that firms with weak governance are more likely to delist (or deregister). Doidge et al. (2010) find for a sample of pre-12h-6 deregistrations (2002–2006) that governance has no significant effect on the probability of exit. By conditioning on the date of listing, and indirectly the expectations of net benefits formed at that time, our analysis provides a better formulated test of the role of SOX and governance on delisting. In all periods, holding other factors constant, firms that are larger, more profitable, and have greater capital raising needs are less likely to delist. Two important aspects of time dependency are revealed by the panel regression results. First, governance has no significant effect on the probability of delisting for firms that list and delist before 2002. By comparison, COG firms are significantly more likely to delist if they originate from countries with strong governance. Consistent with the bonding hypothesis, the costs of obtaining U.S. certification unexpectedly increase for COG firms following SOX, leading those from strong governance countries to delist from U.S. Exchanges. Second, capital raising is a more influential factor affecting whether a firm stays listed after SOX. The two results are mutually reinforcing because firms that need to raise capital value the certification effect of bonding as insiders trade off the lower costs of fundraising against the costs of consuming private benefits. Our finding that firms with strong governance are more likely to delist is more consistent with the finding that all studies agree upon–that it is predominantly firms from developed markets that are delisting. Evidence consistent with the SOX motivating delisting would be to find that the firms delisting after SOX are those just “over the bar” in benefits when costs unexpectedly increase due to SOX. In the first year of listing, COG firms exhibit significantly lower levels of analyst coverage, trading volume, and capital raising, and also originate from countries with significantly stronger governance in relation to stay listed firms. Moreover, the gap in benefits COG firms experience does not decrease, and in fact widens, as the firms become more seasoned. For example, for the stay listed firms, on average 66% of these firms raise capital, 65% have analyst coverage, and 89% have positive trading volume in the year of listing. Over the course of listing these percentages increase significantly. By comparison, for the voluntary delists, on average 44% of these firms raise capital, 42% have analyst coverage, and 78% have positive trading volume in the year of listing; no significant increase in these percentages is observed through the year of delisting. The finding that COG firms experience low realization of benefits ahead of delisting is further evidence that an unexpected increase in costs following SOX motivates their delisting. Finally, the factors motivating firms to be more likely to delist from the U.S. should help illuminate the type of firms that are more likely to list in the U.S. post-SOX. When we compare the firms that list before and after SOX, we find that the firms listing post-SOX are larger, have high capital raising needs, and a significantly higher proportion originate from emerging market countries with weak home market governance compared to those listing before SOX. Further, the home market governance of the emerging market firms listing after SOX is substantially weaker compared to those listing before SOX. Overall, the results suggest that firms with high capital raising needs value the stricter governance post-SOX. While capital raising has always attracted firms to the U.S., the mix of firms from countries which find this appealing has changed over time, and markedly so, since SOX. Our study is the first to investigate time dependency in the type of benefits firms seek from U.S. listing (and conversely, delisting). Our contribution is to show that the role of governance in motivating delistings changes after the passage of SOX and to assess the relative impact of this change. The impact of SOX is large enough to reduce the value firms from well governed countries place on a U.S. listing, and, conversely, to increase its value to firms from weaker governed countries. Although we find that SOX has a significant influence on foreign firms’ listing choices in the U.S., non-U.S. capital markets continue to develop, and further efforts to improve global capital market integration (e.g., Euro-zone and IFRS standards), have also likely reduced the relative attractiveness of U.S. markets as a listing venue. To the extent these factors play a role in the decision to delist, our results cannot be attributed to SOX alone. These events, however, have transpired over a longer period of time, and by conditioning on when a firm lists, we attempt to identify those firms whose decision to delist is most likely attributable to SOX, so as to highlight its effects. The paper is organized as follows. In Section 2 we provide an overview of the related literature and present our hypotheses for delisting from U.S. Exchanges. In Section 3 we describe the sample of foreign listings and delistings and examine how the listing characteristics of foreign firms have changed over time. In Section 4 we present our main findings and test for time variation in the factors affecting the probability of delisting. In Section 5, we investigate time dependency further and analyze the factors associated with firms’ ability to benefit from listing. We also compare the characteristics of the firms listing pre- and post-SOX and discuss what our findings imply about the profile of foreign firms likely to find the U.S. market attractive. Section 6 contains our conclusions.

We examine time dependency in the factors motivating delistings of foreign firms from major U.S. Exchanges. Over the period 1962–2006, we investigate changes in firm, U.S. and home market characteristics that influence the net benefits of firms’ perceive to be associated with listing. Within an overall expectation that the net benefits of listing be positive, SOX brought about increased disclosure and compliance costs, which serves to offset the expected benefits of listing. To date the role and impact of SOX on firm behavior remains controversial–in part due to the difficulty of identifying the firms most susceptible to increased costs. We identify firms that formed their expectations of the net benefits of listing before SOX and then were caught off guard by the unanticipated increase in costs. If SOX is a large influence on firms’ perceptions of net benefits then it should alter the value firms’ place on governance. We hypothesize that if the main reason firms list in the U.S. is to gain the commitment of greater disclosure and the protection of investor rights, then by increasing the costs of compliance, stricter regulations like SOX should lead to the exit of firms from countries with strong governance and investor protection. We use a panel logit model that incorporates information from listing to delisting to estimate the probability of delisting before and after SOX. Holding firm specific, market characteristics, and governance constant, we find that governance does not significantly affect the probability of delisting for firms delisting prior to SOX, whereas firms delisting after SOX are significantly more likely to be from countries with strong governance. For firms caught off guard by the regulatory change, the costs of obtaining U.S. certification unexpectedly increases following SOX, leading those from stronger governance countries to exit the U.S. This is consistent with the bonding hypothesis where firms that value the certification associated with a U.S. listing (i.e., firms from countries with weak governance) are more likely to stay listed and firms that do not value such certification (i.e., firms from countries with strong governance) are more likely to delist when the costs of regulation increase. While a number of studies find that the firms delisting post-SOX are likely to be from countries with weak governance, our finding is more consistent with the observed fact that the majority of firms delisting post-SOX are from developed market countries with strong governance. Evidence consistent with SOX motivating delisting would be to find that the firms delisting after SOX are those just “over the bar” in benefits when costs unexpectedly increase due to SOX. Within this broader context, we find that the firms delisting post-SOX do not benefit from listing in terms of capital raising, analyst coverage, and trading volume to the same extent as the firms that stay listed. Our work does not examine why some firms are less able to generate benefits from listing but it is clear from the findings that listing itself does not automatically confer the benefits firms might have expected. This is an area where future work might usefully be directed. Our work is motivated by recognition that SOX has taken place in the context of a long-term secular trend toward greater global market integration. Some of the accompanying efforts to improve integration and transparency in non-U.S. markets have also likely reduced the relative attractiveness and net benefits of a U.S. cross-listing and hence affected delisting choices. While some of these efforts may partially explain our results, we conclude that SOX appears to be a significant enough force to prompt reassessment of firms’ listing decisions, leading those with strong governance at home and low net benefits from a U.S. listing to delist.