Securities Market Reforms and Market Segments for IPOs: An Analysis of Listing and Delisting Decisions in Germany

This study investigates the listing of IPOs and the delisting from the Prime Standard, the highest regulated stock exchange segment in Germany. The German Stock Exchange instituted this market segment subsequent to the high-technology new economy period in 2003. For a sample of 531 firms, we analyze the economic reasons and consequences of firms entering and leaving this stock market segment during the 2003 to 2015 period. The main reasons are bankruptcy, acquisitions, delisting and most importantly transfers to lower market segments. We used several logit and firm-fixed effects regressions to provide new evidence for firms’ delisting and segment change decisions. Low growth opportunities and low operating performance increase the probability that firms switch to a lower market segment. Consequently, the firms’ cost-benefit considerations are an important explanation for selecting the preferred stock market segment and the transfer to a less regulated market environment.