Abstract

This study provides new evidence of the effects of international listing and delisting on shareholder wealth for U.S. and non-U.S. companies that have listed and subsequently delisted from the Tokyo Stock Exchange. The stock behavior of 81 U.S. and non-U.S. firms between 1973-1997 was examined. Four periods were analyzed: (1) the initial announcement of the listing; (2) the actual listing date; (3) the initial announcement of the delisting and (4) the actual delisting date. Previous research on international listing, specifically the Tokyo Stock Exchange, has shown that it is not associated with positive abnormal stock behavior. However, these prior studies have focused on the actual listing date rather than on the initial announcement of the listing. This study also uses cross-sectional regression analysis to see which variables affect the size of the abnormal returns found. Significantly positive cumulative abnormal returns were found around the time of the listing announcement and significantly negative cumulative abnormal returns were found around the time of the delisting announcement. This evidence is consistent with the market segmentation and management signaling hypotheses. The size of the firm, first time international listing and whether or not the firm had a Japanese subsidiary in place prior to listing provide some explanatory power at the time of the listing, while foreign exchange provides some explanatory power at the time of the delisting