The Impact of Exchange Listing on Corporate Governance: Evidence from Direct Listings
61 Pages Posted: 12 Jun 2018 Last revised: 9 Jun 2021
Date Written: June 8, 2021
Direct listings are a new, but unproven method of going public for industrial firms. We use prior
direct listings by public non-listed REITs (PNLRs) to explore the impact of exchange membership
on corporate governance. We are the first to study companies with publicly owned, but non-listed
shares in a unique setting where the influence of listing is distinct from the confounding effect of
capital raising that is inherent in a traditional IPO. Evidence suggests younger, more profitable
companies with stronger governance and professional management are more likely to directly list.
Moreover, we find internal corporate governance improves beyond the exchange’s requirements
upon listing. Institutional ownership also increases following the listing and we confirm these
changes are not due to capital raising.
Keywords: direct listing, exchange listing, corporate governance, IPO, REIT, PNLR
JEL Classification: G23, G32, G34
Suggested Citation: Suggested Citation