Ex-ante determinants to delist or not delist targets after an M&A

This paper conducts an empirical analysis of the reasons for a new controlling shareholder to either delist the acquired firm or maintain it as a separate listed company after an M&A transaction. This choice is complex, as it combines the success of the transaction and the acquirer’s decision to announce the will to delist. We show that the delisting announcement at the start of the transaction is only a piece of the transaction package and is not a relevant signal for assessing the effective ex post delisting decision. We show that cumulated abnormal returns (CARs) around the M&A announcement are a good indicator of a future delisting decision after the completion of the M&A transaction: the higher the CAR is, the higher is the probability of delisting. Governance and ownership structure are also keystones of the surviving decision. We demonstrate that the control structure of the target before the transaction continues to play a persistent role after a successful acquisition. A high controlling stake by an incumbent corporate shareholder favors a surviving over a delisting decision.