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An Examination of Canadian Firms Delisting from U.S. Exchanges

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Author Info
Jonathan Witmer
Abstract

This paper examines Canadian and other foreign firms that have been involuntarily delisted from major U.S. exchanges. I find that, for most countries, less than 10% of firms get delisted from a U.S. exchange during my sample period. For Canada, more than 25% of firms listed in the United States get involuntarily delisted. This effect is more pronounced in Nasdaq-listed firms, where more than 40% of Canadian firms eventually get delisted, compared to about 15% of other foreign firms. After controlling for firm characteristics that have an impact on involuntary delistings, such as size, exchange listing, previous year's return, volatility, and leverage, Canadian firms still have a higher propensity to get delisted than other foreign cross-listed firms. However, in a comparison to a U.S. matched sample, there is no statistically significant difference in the likelihood of Canadian firms being delisted, relative to these U.S. firms. These results suggest that Canadian firms may have been treated more similarly to U.S. firms under the U.S. exchanges' rules and enforcement of their continued listing criteria, and that the bonding provided by U.S. exchanges may be stronger for Canadian and U.S. firms. Also, Canadian firms may have fewer impediments to listing in the United States such that small, high-growth Canadian firms have been more able to access U.S. markets compared to foreign firms.

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Paper provided by Bank of Canada in its series Working Papers with number 08-11.

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Length: 44 pages
Date of creation: 2008
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Handle: RePEc:bca:bocawp:08-11

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Keywords: Financial markets; International topics;

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Find related papers by JEL classification:
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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References listed on IDEAS
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  1. Sergei Sarkissian, 2004. "The Overseas Listing Decision: New Evidence of Proximity Preference," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 17(3), pages 769-809. [Downloadable!] (restricted)
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    Other versions:
  3. Ian Domowitz & Jack Glen & Ananth Madhavan, 1998. "International Cross-Listing and Order Flow Migration: Evidence from an Emerging Market," Journal of Finance, American Finance Association, vol. 53(6), pages 2001-2027, December. [Downloadable!] (restricted)
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  5. G. Karolyi, 2006. "The World of Cross-Listings and Cross-Listings of the World: Challenging Conventional Wisdom," Review of Finance, Springer, vol. 10(1), pages 99-152, 03. [Downloadable!] (restricted)
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  11. Brian J. Bushee & Christian Leuz, 2003. "Economic Consequences of SEC Disclosure Regulation," Center for Financial Institutions Working Papers 02-24, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
  12. Karolyi, G. Andrew, 2004. "The World of Cross-Listings and Cross-Listings of the World: Challenging Conventional Wisdom," Working Paper Series 2004-14, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
  13. Michael R. King & Dan Segal, 2006. "The Long-Term Effects of Cross-Listing Investor Recognition, and Ownership Structure on Valuation," Working Papers 06-44, Bank of Canada. [Downloadable!]
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  14. Stephen R. Foerster & G. Andrew Karolyi, 1999. "The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the United States," Journal of Finance, American Finance Association, vol. 54(3), pages 981-1013, 06. [Downloadable!] (restricted)
  15. Doidge, Craig, 2004. "U.S. cross-listings and the private benefits of control: evidence from dual-class firms," Journal of Financial Economics, Elsevier, vol. 72(3), pages 519-553, June. [Downloadable!] (restricted)
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