Abstract:

In recent years there bas been a dramatic increase in delistings from stock exchanges in the US and Europe, and this trend has been partly attributed to increasing administrative costs in listed companies. Has corporate governance regulation gone too far? We examine delistings from European stock exchanges 1995-2005 and find that standard corporate governance regulation- like investor protection and corporate governance codes- is associated with more delistings and in particularly going private transactions. In contrast, the tendency to go private is found to be lower, when the quality of overall governance (World Bank governance index) is high. The results continue to hold when we take into consideration that governance policy may be endogenous