The impact of exchange listing on corporate governance: Evidence from direct listings

We use prior direct listings by public nonlisted REITs (PNLRs) to explore the impact of exchange membership on corporate governance. We study companies with public, but nonlisted shares in a unique setting where the influence of listing is distinct from the confounding effect of capital raising. Evidence suggests younger, more profitable companies with stronger governance and professional management are more likely to directly list. Institutional ownership increases after listing and these changes are not due to future capital raising. Moreover, internal corporate governance improves beyond the exchange's requirements, especially for those companies with greater stock liquidity and more institutional ownership.