Listings and Delistings: Spillover to Firm Value
Nam, Hyunna.
2020
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Thesis (M.S.)--Tufts University, 2020.
Submitted to the Dept. of Economics.
Advisor: Marcelo Bianconi.
Committee: Dan Richards.
Keywords: Economics, and Finance.
Using local projections-based impulse response function analysis on quarterly panel data of the S&P 500 member firms over a 30-year period from 1990Q1 to 2019Q4, I hypothesize and demonstrate ... read morethat changes in listings cause a significant positive spillover effect on firm value through increased economic activity even after controlling for firm-specific and market factors. The results imply that with the spillover effect considered, the true value of listed (delisted) firms should be greater (less) than the value that would be without considering the spillover effect. This implies that ignoring this spillover effect causes a bias in valuation of the firm and of being listed by underestimating (overestimating) the true value of listed (delisted) firms. While the traditional market share theory and the spillover effect are not mutually exclusive to each other, the traditional theory does not explain the positive effect from changes in listings on firm value. The spillover effect might be a possible explanation, at least in part, for the U.S. listing gap described by Doidge, Karolyi, and Stulz (2017) in that the drastic fall in the number of listed firms may be partly attributed to the bias caused by ignoring the spillover effect on firm value. The conclusion of this research is that firms should consider any positive spillover effects of changes in the number of listings in the U.S. public market that channels back to enhance firm value through increased economic activity.read less - ID:
- c821gz438
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