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Merger-Driven Listing Dynamics

Published online by Cambridge University Press:  11 December 2023

B. Espen Eckbo Open the ORCID record for B. Espen Eckbo [Opens in a new window]  and
Markus Lithell
B. Espen Eckbo*
Affiliation:
Dartmouth College Tuck School of Business and Norwegian School of Economics
Markus Lithell
Affiliation:
Norwegian School of Economics markus.lithell@nhh.no
*
b.espen.eckbo@dartmouth.edu (corresponding author)
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Abstract

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Stock-market effectiveness in attracting and retaining firms under public ownership depends not only on stand-alone firms’ net listing benefits but also on gains from merging with a public acquirer. Using a novel merger-adjusted listing count, we show that the dramatic (≈50%) post-1996 U.S. listing decline—often attributed to declining listing benefits—is reversed as the “missing” firms de facto continue existing inside their public acquirers. Our merger adjustment also eliminates the U.S. listing gap, pointing instead to a distinct U.S. listing advantage: providing access to a well-functioning market for complex merger transactions.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , First View , pp. 1 - 49
Creative Commons
Creative Common License - CCCreative Common License - BY
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0), which permits unrestricted re-use, distribution and reproduction, provided the original article is properly cited.
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington

Footnotes

We are grateful for the comments and suggestions of Sanjai Bhagat, Eric de Bodt, Ing-Haw Cheng, Jean-Gabriel Cousin, Joan Farre-Mensa (discussant), Jose Fillat (discussant), Kayla Freeman (discussant), Laurent Fresard, Andrey Golubov, Jarrad Harford (the editor), Peter Iliev (the referee), Tore Leite, Eva Liljeblom, Lubomir Litov (discussant), Tanakorn Makaew, Vojislav Maksimovic (discussant), Francesco Mazzola (discussant), Kasper Meisner Nielsen (discussant), Øyvind Norli, Jay Ritter, Ali Sanati, Felipe Severino, Keke Song (discussant), René Stulz (discussant), Karin Thorburn, Adam Winegar (discussant), Min Yang (discussant), and David Yin (discussant). We also thank the seminar participants at Humboldt University, Iowa State University, Norwegian School of Economics, Oslo Metropolitan University, Dartmouth College, Vienna University of Economics and Business, and conference participants at the 2020 Australasian Finance and Banking Conference, 2018 Bergen Entrepreneurship and Finance Conference, 2021 Boca Corporate Finance and Governance Conference, 2021 Economics Business and Organization Research Conference, 2021 European Financial Management Association Annual Meeting, 2020 Finance Organizations and Markets Conference, 2021 Finance Symposium, 2021 Financial Management Association Annual Meeting, 2021 International Young Finance Scholar Conference, 2020 PhD Nordic Finance Workshop, 2021 Nordic Initiative for Corporate Economics Conference, 2021 Midwest Finance Association Annual Meeting, 2021 SFS Cavalcade North America, 2021 Vietnam Symposium in Banking and Finance, and 2021 World Finance Conference. This project has received partial financial support from Tuck’s Lindenauer Forum for Governance Research and from the Norwegian Research Council (NRC #273678 “Incentives, Access to Capital, and Innovation”).

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