Intangible investments and voluntary delisting

Drawing on a cost-benefit perspective, this paper explores the relation between information asymmetry and the decision to delist from stock exchanges during periods of uncertainty. Specifically, it investigates the role of firms’ intangible investments and the availability of alternative sources of finance on the decision to delist from foreign stock markets. There is a significant positive relationship between investments in intangible assets and firms’ decision to delist. Moreover, the evidence suggests that the positive intangibles-delisting nexus is accentuated by the availability of alternative sources of financing. Collectively, the results are consistent with the theoretical argument that the higher information asymmetry associated with intangible assets may increase the cost of staying listed on stock exchanges, particularly, in periods of uncertainty (captured in this study by accounting fraud allegations targeting cross-listed firms). The results have important implications for corporate managers, capital market participants, and policy makers.