Exodus from the Johannesburg Stock Exchange: a qualitative exploration of the rationales for de-listing

Companies list on public stock exchanges to raise capital, although there are a multitude of other underlying reasons for doing so, such as agency issues, gaining better access to debt markets or rebalancing their capital structures (Pagano et al., 1998). Initial public offerings are often in the news and attract a lot of media attention and are generally viewed in a positive light. There are, however, many companies that delist from public exchanges. In South Africa, the shrinking stock exchange has drawn significant media attention, with both new listings and delistings receiving considerable coverage. Recent news articles have focused on the trend of delistings from the Johannesburg Stock Exchange (JSE), raising concerns about the exchange’s size. Local business conditions and listing requirements are mentioned as primary reasons for the spate of delistings (see, e.g. Arnoldi, 2022; Moneyweb, 2021; BiZNews, 2022, among others).

There are various motives for delisting; however, these reasons are primarily grouped as either involuntary or voluntary. Involuntary delisting involves non-compliance with bourse requirements, such as liquidity requirements or regulatory compliance, leading to the stock exchange removing the affected company. Voluntary delisting, on the other hand, is initiated by management. A variety of possible reasons for such an action have been identified in prior studies, including a company’s shares being acquired in full, corporate governance motives and, frequently, a negatively skewed cost/benefit analysis (Martinez and Serve, 2017). Company-specific determinants such as lower growth opportunities, ownership structure, leverage and market momentum, company size, operating performance, stock liquidity, audit fees, external economic factors and agency issues have all been found to influence the propensity to delist in international and South African studies (Bessler et al., 2023; Marosi and Massoud, 2007; Lansdell et al., 2025). While the determinants influencing the delisting decision are important, the motives recorded for delisting provide additional information and aid understanding of the decision in general and in the South African context. The motives for delisting from the JSE are likely similar to those reported in prior international studies; however, the literature on delistings from the JSE is sparse. While the reasoning and types of delistings may be similar, the proportions associated with each motive differ from those in other markets. This has important ramifications for the South African market and serves as a key motivation for this study to buttress and deliver insights into a crucial area lacking in the current literature.

While prior studies have explored delisting trends and found similar changes in other markets, there are key differences between this paper and those studies. The key motivation for this study was to determine what motivates companies to delist from the JSE and to better understand the market dynamics in this context. Doidge et al. (2017) showed that in the USA, the number of listed companies is also lower than in the past, with a key driver of the lower number of listings being mergers, and that listing seems more appropriate for larger firms than was the case in the past. Furthermore, technological and market advancements, such as improved private equity and private market trading, have led to fewer listings. In South Africa, prior research has found this unlikely to be the primary driver of the reduced number of listings on the JSE; the current paper aimed to determine what drove the trend in South Africa (Nikani and Holland, 2022).

Recent studies (Lansdell et al., 2025; Makuvaza et al., 2025) considered financial and economic data to find many determinants influencing the propensity to delist in the South African context; however, while this perspective is crucial to understand delisting behaviour, the delisting statements published by companies also contain rich, multilayered data explaining the decision which is not fully enveloped by the determinants, as shown in this paper. Nikani and Holland (2022) conducted a similar qualitative study but only explored voluntary delisting reasons, excluding acquisitions, which are a primary driver of delisting and, in some cases, are voluntary by nature, on a relatively small sample (roughly 4% of delisted companies). Financial data, while more objective than statements, is an abstraction of a company’s operations and economic conditions and would not necessarily capture the reason for every delisting. The descriptive and regression analyses in this paper show that, while important insights are found in this data, it misses some of the more nuanced reasons for delisting from a stock exchange, for example, delisting due to changes in central bank regulation. A holistic overview of the motives driving companies to delist is thus lacking in the current literature, and this study contributes by using a large sample, not precluding any motivations from the analysis, and by considering the case of South Africa, which differs from that of the USA.

Due to the limited scope of prior studies in the South African context or the solely quantitative type of methods used to examine external characteristics (see, e.g. Liao, 2020 or Lansdell et al., 2025), there is a rich tapestry of rationales and motives for delisting from the JSE, which is hereto largely unexplored. In this study, delisting due to liquidation was found to be much higher than in Liao (2020). Negative sentiment towards small businesses specifically was a primary reason for many voluntary delistings, while low future growth expectations were not a primary driver of delisting activity, in contrast to the findings of some purely quantitative studies. An unprecedented finding was that 2% of delistings were conducted solely for the purposes of name and sector changes, which would be impossible to capture from a company’s financials. Another voluntary sub-category of delisting activity involves companies moving between exchange sections (Martinez and Serve, 2017). In the case of the JSE, companies can delist from the main board and move to the AltX exchange, a smaller exchange run by the JSE with less onerous listing requirements, intended for lower-market-capitalisation companies. No prior South African studies, and seemingly few international ones, explore this rationale for delisting from an exchange. This was a key finding of this study, showing that some companies delisted from the JSE’s main board to the AltX, either because their operations had likely shrunk or to take advantage of the lower listing requirements and costs. Critically, in the vein of the two aforementioned examples, there are no prior studies that offered a holistic view of rationales for all types of delistings from the JSE, primarily because the quantitative approach would omit such incidences, while other studies possibly used small samples.

South Africa is an emerging economy. Similar economies have tended to see more listings over the same period, making an understanding of their capital markets even more important for optimal financing decision-making in the context of generating growth. The JSE is the largest bourse on the African continent, by far, and one of the world’s 20 largest stock exchanges by market capitalisation, making it an important market to understand, especially in an emerging-markets context. The study’s findings might also contribute to asset pricing and to understanding the risk profile of the JSE. For example, an exchange with a comparatively high rate of liquidations compared with other similar exchanges might require different treatment with regard to pricing liquidation or default risk.

McDonald (2022) documented that in the USA, listings had nearly halved from the early 1990s to the late 2010s. There are various reasons why this is the case, but he found that the current composition of the stock markets in the USA is larger and more stable than was the case in the 1990s, implying that the cost–benefit relationship is more positively skewed for such companies. Block (2004) conducted a survey study, finding that smaller firms tend to delist in the face of increased costs, which in turn led to an increase in larger firms, composing the NASDAQ, similar to the findings of McDonald (2022). It seems, therefore, that there is a cost associated with increased market stability, which is more easily borne by larger companies. Nikani and Holland (2022) found a similar trend on the JSE; however, the underlying causes are heterogeneous, and while listing costs are a definite factor, it is not the only primary driving force of the phenomenon on the exchange, or for others internationally. Martinez and Serve (2017) conducted a wide-ranging literature review on the issue and found that while listing costs and, ostensibly, firm size are indeed key drivers of delisting, there are many other factors driving the phenomenon.

There are various motives for listing from the need for analyst coverage and debt reduction to raising capital for expansion (Pour and Lasfer, 2013). Given the benefits of being listed, including the ability to raise capital, a potential reduction in agency costs due to public scrutiny and possibly the ability to borrow at lower costs, the reasons for terminating a listing rest on an analysis of the cost/benefit relationship of maintaining a listing. These costs include audit fees, fees to maintain the listing and the cost associated with extensive reporting requirements. Many prior studies had identified listing costs as being a primary driver of delisting activity (see, e.g. Martinez and Serve, 2017 or Nikani and Holland, 2022). Doidge et al. (2017), however, found that while listing costs are an important factor, the primary driver of the lower number of listings on the US exchanges is consolidation, specifically larger firms acquiring smaller firms coupled with technological advancements in the private financing space. Contrary to previous studies, they found that these are the biggest factors leading to the US exchanges comprising larger companies than in the past. Importantly, the paper explored the voluntary reasons for delisting and the propensity to list or delist, considered the prevalence of involuntary delisting due to economic conditions and factored in the size threshold at which listing was beneficial. Whether the large observed decline in listed firms is due to listing costs or due to consolidation is a contentious point in the literature; however, these are seemingly the two main drivers of delisting activity in the USA, together with private equity and technological advancements leading to fewer new listings as they offer reasonable funding opportunity alternatives. There are also other reasons why firms voluntarily delist; however, despite them possibly not being the key drivers thereof, they are underexplored in the literature.

Marosi and Massoud (2007) found that other than listing costs, firms with fewer growth opportunities, above-average insider ownership, relatively low institutional ownership, higher debt and lower market momentum are more likely to delist. These characteristics, coupled with the cost of maintaining a listing, provide some insights into the rationales for delisting and thus seem to follow a logical, rational path. Maintaining a listing while, for example, experiencing few growth opportunities and hence a lower need for equity capital, would likely be a well-trod cost–benefit exercise, and the empirical evidence points to this being the case indeed. Martinez and Serve (2017) confirmed these points with a wide-ranging review of the literature on the subject while further listing firm characteristics such as lower profitability, high potential financial distress costs and even financing preferences. Bessler et al. (2023) argued that another reason, albeit less cited, is agency costs and that an increase thereof leads to a higher propensity to move to a less regulated exchange segment or to delist. Liao (2020) showed that in emerging markets, the rule of law influences delisting activity. In terms of cross-listings, companies tend to terminate their foreign listings when trading volume and return on such listings decrease (You et al., 2012). All the reasons for delisting, except consolidation, in the literature relate in some way to the cost–benefit of maintaining a listing. There are numerous reasons to terminate a listing, but at the core of the decision is whether it offers any benefit to the listed firm. Given the dropping number of listed firms on many stock exchanges, this relationship is likely often not skewed towards the benefit side. This is even more pertinent, given that recent research has shown that the cost of delisting and trading over-the-counter or on smaller markets is not necessarily as great as was often thought (Li et al., 2024). It is not without cost; various studies have found negative aftereffects, such as a substantial loss of shareholder value and reduced liquidity (Martinez and Serve, 2017). Delisting activity is, however, not homogeneous, and there are different reasons for delisting from various exchanges due to their unique features.

Prior research on the topic of delisting was mainly focused on exchanges in developed countries, with the majority being conducted on the US, UK or European exchanges (see, e.g. Martinez and Serve, 2017; McDonald, 2022; Doidge et al., 2017). There are few studies on emerging markets and even fewer still that focus on the reasons why companies delist from the JSE, which leads to a gap in the understanding of what drives the delisting phenomenon on the exchange and emerging markets (Liao, 2020; Nikani and Holland, 2022). The literature surrounding delisting is sparse, although there seems to be a recent uptick in papers trying to make sense of the phenomenon. Doidge et al. (2017) showed that, in general, listings in emerging markets grew significantly. However, South Africa, Mexico and Brazil stand out as larger markets where listings dropped dramatically. Bortolon and da Silva Junior (2015) explored the Brazilian case through the lens of corporate governance, finding that it does not explain the propensity to delist. Abdelhakeem (2025), however, found that in the case of Egypt, implementing corporate governance measures as had been done in many markets, including South Africa, to align with developed capital markets, led to an increase in listing costs and the delisting of primarily smaller companies. Liao (2020) explored delistings across a broad emerging-market sample, considering corporate governance and the perceived rule of law as factors influencing the decision, and found that these measures seem to drive delisting activity in the emerging-market context. The study was significant in scope and looked at 23 emerging markets and their delisting trends, and despite some of its findings being somewhat different from those of Bortolon and da Silva Junior (2025), the primary findings that poor governance may increase delisting activity in terms of liquidations, but that good governance may increase “going private” transactions, are important and significant. There are, however, some nuances to consider and the heterogeneous nature of emerging markets.

Liao (2020) argued that various factors make emerging markets distinct, including increased volatility, lower levels of global integration and lower-quality regulatory and accounting frameworks. Their study uses the rule of law index as a proxy for the quality of the rule of law; however, in the South African case, this measure has been mostly flat over the past decade and likely is not a key driver of recent delisting activity (World Justice Project, 2024). The South African financial system is argued to be one of the most sophisticated in the world, and this particular aspect of corporate governance is less likely to be the driver of delisting (Heymans and Santana, 2018). Further to this, the study period, 2008–2014, predated structural changes to the South African investment protection laws; therefore, there was likely little influence of these changes on the overall regression analysis. While these factors may have had some influence in emerging markets, it is very unlikely that they were the main drivers of such activity in the South African context. There is, however, another aspect of corporate governance that probably influenced delisting activity in this context: stricter regulation during the early 2000s, when the exchange saw a spate of delistings. Such cases are typically related to the cost of compliance, which can be quite high (Martinez and Serve, 2017). There remains relatively little literature on delisting activity in emerging markets, given the importance of the issue. While it is likely that the drivers of the activity may be similar to those of the USA and the UK, it is not well documented. This paper intends to partially fill this gap in the literature, given the size of the JSE as an important emerging market exchange.

Most papers reviewed considered voluntary delisting activity in isolation, with good reason. As per the definition in Martinez and Serve (2017), involuntary delisting involves failure to adhere to listing requirements or bankruptcy. Therefore, to understand delisting motives, it makes sense to study delisting activity where it is the express decision of the entity. However, in many papers, a short overview of delistings of all forms is given for a varying period. These often only split the activities between voluntary and involuntary, not specifically between non-compliance with requirements or bankruptcy when discussing non-voluntary delisting, or provide more specific reasons (for example, Bessler et al., 2023; Liao, 2020). In the case of Liao (2020), being acquired is considered an involuntary delisting, with only consolidation, going private or bankruptcy considered in the study. This current paper adds a holistic overview of delistings from the JSE, including a breakdown between involuntary delisting activity due to stock exchange requirements not being met or to bankruptcy, and consolidation activity. Further to this, the breadth of other reasons that companies gave is also added to the literature.

Nikani and Holland (2022) performed an analysis of voluntary delisting from the JSE by analysing the content of statements at the time of delisting, finding that a variety of factors, in line with previous studies, affect the propensity to delist. The study, however, did not consider involuntary delisting nor was acquisitions one of the rationales studied for delisting. Ostensibly, they may have considered being acquired an involuntary delisting type. As shown in Doidge et al. (2017), acquisitions are the major driver of the smaller US stock markets; it may very well be the case in South Africa also, but it has yet to be explored. This left a substantial gap in our understanding of why companies are delisted from the JSE. Neither involuntary delisting nor being acquired has been explored as a company-side motivation for delisting from the JSE.

To gain a holistic understanding of the reasons why companies delist, there are two options to pursue. The first option would be to gather financial data and ascertain which firm characteristics led to delisting in the past. This approach has been used by, inter alia, Liao (2020); Lansdell et al. (2025) and Bessler et al. (2023). The other way is to study the rationale as communicated by the company upon delisting, as in Nikani and Holland (2022).

In this study, the latter option was chosen to understand the rationale from the perspective of the delisting company while acknowledging the possibility of layered delisting rationales, as observed by Nikani and Holland (2022). This enabled the discovery of new rationales that had not been previously studied. The study is exploratory and descriptive in nature, seeking to make sense of why companies delist rather than to build a theoretical framework. To this end, content analysis was identified to be an appropriate design for the study due to the availability of delisting statements. In most cases, when companies delist from the JSE, they issue a circular to shareholders with a clear, detailed rationale for the decision. In other cases, there are statements either from the JSE or from the company in a shorthand style message on a content distribution system called the Stock Exchange News Service (SENS). The SENS must be used for all announcements regarding matters materially affecting shareholders; therefore, announcements on this system, together with circulars to shareholders, also shared on SENS, are consistently more reliable than, say, corporate websites of long-wound-down entities. While there may be an element of subjectivity which is not present when studying firm characteristics through quantitative analysis and regression, quantitative analysis will similarly only tell part of the story though it can capture possible motives for delisting such as low income growth, but not the nuanced rationale; for example, to move to a less regulated area of the same exchange due to the cost of maintaining a primary index listing while experiencing issues with practical ownership structure matters hindering business.

In line with the chosen qualitative nature of this paper, the research objectives of the study were to:

• Perform an analysis of SENS announcements before delisting to determine the reasons given by companies for delisting from the stock exchange; and

• Analyse the results of the content analysis to find trends and gain a deeper understanding of the various reasons and rationales given by companies for delisting.

The study used a content analysis method, which is descriptive in nature. Content analysis can be a priori, that is, guided by prior studies identified in the literature to give direction to the analysis, or it can be emerging, meaning that the analysis and associated categories are guided by the content in the analysis. This entails, in this context, a categorisation of data into categories (Stemler, 2001). In the case of this study, categories were pre-defined based upon the literature reviewed because there existed a significant body of knowledge around the topic, and clear-cut categories were straightforward to identify (Stemler, 2001).

The categories identified in the literature are as follows:

• Acquired (Doidge et al., 2017) – In the literature, acquisition is a primary driver of delisting activity.

• Merged (Doidge et al., 2017; Martinez and Serve, 2017) – Consolidation through mergers is discussed in the literature as a common reason many companies delist.

• Liquidity (bankruptcy) (Martinez and Serve, 2017; Liao, 2020) – Liquidity is a key reason given for delisting in prior studies, especially so in emerging markets.

• Listing requirements (Block, 2004; Nikani and Holland, 2022) – The cost of listing, in whichever way, is ostensibly a key reason for delisting from an exchange, and this category was the primary classification space for such cases.

• Moved to a smaller exchange (Bessler et al., 2023) – Although undocumented in the literature for the JSE, the category was included because the AltX offers such an opportunity.

A list of all modern-era delistings from the JSE was obtained from IRESS, a private data provider to which the author has access by virtue of his employer. The list contained the company name, delisting date, a brief overview of each company’s financial position and, in some cases, a listing date. Announcements and circular letters sent via the SENS are stored in the IRESS News or library modules. The announcements made around delisting dates, as in the acquired list, were studied to determine a reason for delisting, which was subsequently captured into a spreadsheet. The data was then coded (with a rationale assigned per the predefined categories) and captured in the same spreadsheet. In the South African context, companies are incorporated by way of a scheme of arrangement that sets out the company’s structure. Often, companies could mention changes to this in the context of being acquired, going private or merging; hence, the coding for these terms relied on subsequent interpretation of the delisting circulars, where a simple phrase was not adequate and a deeper phrasing had to be searched for. In most cases, the circular would make it obvious that a company was being acquired or merging and/or that shares were being delisted with the intention of going private, usually using such terms. Coding regarding liquidity relied mostly on statements from the bourse about the delisting of companies due to an inability to satisfy bourse requirements for being an ongoing financial concern, maintaining listing fees and submitting accounts. Listing requirements were more complex; however, coding announcements as such was straightforward because companies would mention going private due to listing costs, compliance costs or regulatory reporting requirements, for example. Where the rationale for delisting was not clear or unambiguous in the last circular of a company, the company was removed from the sample and replaced by another randomly selected company; in this way, the reliability of the content analysis was assured. Further to this, a sub-sample of 30 announcements together with the categories and coding was shared with a fellow researcher who is well acquainted with the South African corporate environment and was asked to categorise the sample according to the coding guide, as described above. Cohen’s Kappa was calculated to measure the agreement between the assisting researcher and the author’s classification of the sub-sample of rationales. The measure provides a value which takes into account possible incidental agreement, and a value exceeding 0.71 is considered to indicate strong agreement between raters. A value of 0.82 was calculated, indicating that in general, the classifications between the author and the assisting researcher were adequately similar. It is worth mentioning that the assisting researcher also identified sub-themes and could not categorise one of the announcements as it spoke to delisting due to the change of company name, which was not a predefined category, confirming the subsequent addition of a sub-catch-all category under “other” for such cases, as appropriate.

During the first batch of circulars that were analysed, care was taken to ensure the categories identified in the literature were adequate. For the most part, this was the case; however, there were some rationales provided that obviously did not fit within the pre-defined categories. It was noted that such cases were relatively rare and that the coding categories identified in the literature mostly captured the rationales provided well, and a catch-all group for any other reasons was created. In many cases, companies provided more than one reason for delisting, but in almost all cases, a primary reason was clearly outlined. Where it was not clear which reason was the primary reason, the circular was discarded and the company was replaced with another randomly selected one. Two additional quantitative analyses were performed after the content analysis to ensure the robustness of the analysis and confirm the findings of the content analysis. Various sorting and data filters were used within Excel to count the category totals and to explore secondary reasons for delisting. These reasons were then used to categorise the companies’ relevant financial measures and to enable descriptive and inferential analyses of the data according to the reasons for delisting.

A total of 1,455 companies are on the list of companies that have delisted from the JSE. Many of the delistings, however, were recorded before the inception of the SENS and computerised announcements, and therefore, there is no easily accessible record. This is not considered a major limitation as the delisting trend only started in the mid-1990s, while data from that time is available. The IRESS library module, which houses an archive of communications issued by JSE-listed companies, was searched for each delisted company for which records are available. The number of companies on the list that also had SENS announcements in the database was 712, and only 593 had delisting dates. This significantly reduced the population for sampling. Despite having SENS announcements associated with a company, not all companies had SENS announcements containing information regarding the delisting of the company. A sample of 300 companies was randomly selected from the list of 593 companies. Of the 300 companies sampled, 21 had no records regarding their delisting. A further 21 companies were then added to the sample to ensure that the reasons for the 300 companies’ delisting were recorded. The record of delistings starts in 1993; however, it is only from late 1999 that SENS announcements were recorded and stored electronically in the IRESS News database. This dictated the period of the study to be from 1999 to 2022, with these being the years during which analysis of the SENS statements was possible.

Ethical approval for the study was obtained from the ethics committee internal to the authors’ institution, and all care has been taken to deidentify the companies considered in the study as per the ethical clearance obtained.

The data regarding delistings were analysed through content analysis; however, a description of the entire data set was conducted to understand delisting trends over the study period before delving into the delisting rationales provided by companies. Further to this, an analysis was conducted to link key financial ratios to the various motives for delisting as a robustness check and to situate this paper within the broader literature on the topic.

The data set contains the delisting date for only some of the companies on the delisted companies list. Of the 712 companies with data, 593 had a delisting date recorded.

In Figure 1, the number of delistings per year is presented. There are few delistings in 1999, with activity seemingly peaking in 2001 and 2002, followed by a steady decline to a steady rate in 2016. Given that in 1998, the JSE had over 800 listed companies and now has fewer than 300, the overall trend is as expected. The JSE also introduced more stringent listing requirements in the early 2000s, which seems to have been a significant driver of delisting activity at the time and accounted for most of the activity over the entire period.

The average length of time that companies remained listed was 20 years. The listing length was available for only 263 of the companies in the population. Figure 2 provides an overview of the average age of companies delisting in each year. The data for 1999–2004 was left out because the data set contained only one company per year for which both listing and delisting dates were available; from 2005 onwards, the average is at least five companies per year.

As can be gathered from Figure 2 and the overall mean delisting age of 20 years, most companies had been listed for a significant period before delisting. This can be interpreted as companies possibly not taking the delisting decision lightly. It may also be interpreted that companies listed whilst relatively young and later lose the need to raise capital on the equity market and then delist. Seemingly, relatively few companies list for only short periods. Another possibility is that the initial listing costs deter short-term capital raises with rapid subsequent delistings.

The longest-listed company that left the stock exchange had been listed for 98 years and was acquired by an international competitor, while the shortest listing period was 1 year in three cases, due to acquisitions by local competitors.

Insights derived from the operating sectors of the delisted companies are somewhat limited because of how industry sectors are stored in the database used for this study. For most companies, the specific sector is recorded at the time of delisting rather than the general industry affiliation i.e. rather than mining as an overall sector, platinum mining would be listed in the database. Nonetheless, some insights were possible. Although not reported in full here due to length limitations, mining, information and communications technology, construction and real estate investment companies accounted for a larger share of delisting activity than other sectors.

The results from the content analysis of the sample of 300 companies resulted in the primary distribution of rationales or reasons provided for the delisting as shown in Table 1.

The majority of delistings involved mergers and acquisitions. This is similar to the findings of Doidge et al. (2017) for the US stock market, where most such activity was attributed to public companies consolidating. Expressed as a percentage of total delistings, consolidation accounted for 57% of all delisting activity on the JSE. Given the focus of prior studies on the topic of only considering certain types of delisting activity, this result adds to the literature to show that the primary reason for the dearth of listings on the JSE is due to consolidation and that the main cause is not necessarily only listing requirements, as implied in the news and in prior research. As can be seen in Figure 3, consolidation accounted for the majority of delisting cases, while listing requirements accounted for the second-largest number of delistings, albeit significantly fewer than consolidation activity. A further analysis of the associated announcements led to the establishment of two sub-categories for consolidation activity: local or international. In most cases, it was straightforward to determine whether a company was acquired or merged with a local or international entity because the registration details of both parties were published in the announcements or circulars. Of the 171 consolidation-related delistings, 31 were acquired or merged into an international organisation. The remaining 82% of delisting due to consolidation activity were all local mergers and acquisitions. Doidge et al. (2017) reported similar findings in the US markets, with acquisitions as a driver of the lower number of listed companies, reinforcing their finding that consolidation is the key driver of smaller capital markets in terms of listings. However, a key finding from Doidge et al. (2017) was that the majority of acquirers are listed companies on the same exchange. In this study, the analysis shows that a significant number (20%) of acquisitions are by foreign companies, effectively taking the acquired company private in South Africa, a previously unrecorded insight.

The next-largest driver of delisting activity was listing requirements, but this accounted for only 17% of delisting activity in the sample. While this is significant, listing requirements clearly accounted for only some delisting activity and are not the main driver thereof. Given the high propensity to delist due to listing requirements, it is possible that these requirements are discouraging new listings and, in this manner, indirectly contributing to the relatively low number of listed companies on the exchange. This category of the content analysis, however, included companies that were delisted for breaching listing requirements; thus, they were involuntarily delisted. During the content analysis, multiple rationales were recorded, where possible, from delisting announcements; these were collected as a secondary objective of the study.

This data was used to gain insight into why listing requirements were cited as the reason for the delisting. Records showing breaches of listing requirements accounted for 15 of the 52 delistings. Therefore, if listing requirements are considered a constraint on the cost–benefit relationship, it would imply that 12% of overall delisting is due to the cost of maintaining a listing or to delisting because the exchange’s requirements are not desirable for the company.

While acquisitions and mergers account for most delistings, the rationales in other categories were multi-layered and often interesting. Some examples were extracted from circulars or announcements and are shown below to illustrate the point:

As can be seen in the above quotes, there are layered rationales driving the delisting decision for companies that delist due to listing requirements, be it the cost of listing, flexibility or even thin trading, to name a few.

A breakdown of reasons for voluntary delisting due to listing requirements is presented in Table 2. In many cases, companies provided compounded statements explaining their reasoning for the decision; the table contains more values than the number of delisted companies.

The cost of maintaining a listing was the primary reason proffered for delisting, while thin trading was also widely mentioned. The negative sentiment in the markets towards smaller companies was a frequent reason for delisting and likely relates to lower trading volumes and exclusion from certain indices, leading to perceptions that share prices are undervalued and that returns are difficult to realise. Flexibility and the structure of the company were given as reasons seven times, indicating that the flexibility sought from delisting is not often sought in this manner. In five cases, companies delisted due to a perceived undervaluation of their shares, leading to suboptimal conditions for fundraising and investor attraction. Similarly, in three cases, the inability to raise capital on favourable terms was mentioned. It is likely that all these various factors have at least some degree of interplay and that the overall value proposition for these companies was not attractive enough to justify the cost of listing.

The third most common rationale for companies exiting the JSE was liquidity issues. At 12% of d-listing activity, it is similar in magnitude to the number of companies citing listing requirements in their delisting rationales. If one considers that about 5% of delisting activity was due to breaches of listing requirements, then, in total, 17% of all delisting activity is purely involuntary.

The final defined category of the content analysis entailed coding statements for those that moved to a smaller exchange. In the case of the JSE, companies are listed either on the main board or on AltX. Five records were found of companies moving from the JSE main board to the AltX. The rationale for the moves was not provided, but ostensibly, less onerous listing requirements may have motivated the moves.

Finally, a catch-all category of other reasons was recorded. Many delisting rationales conveyed messages beyond the main categories. Reasonings varied from changes to ownership structures better suited to private ownership to changes in capital gains tax rates and legislation. Table 3 provides a summary of this category.

The other primary reason for delisting, not identified in the literature, was companies voluntarily winding down their operations. In such cases, the rationales provided were that the companies did not see opportunities for future growth and subsequently sold off their assets, distributing the proceeds to investors. In most cases, the companies remained operational but terminated the listed part of their operations; these actions were not found to be liquidations because the companies did not go bankrupt or face liquidity issues and instead reported no future need for funding, so the listing costs would essentially be a wasted expenditure. An unexpected result was that companies reported delisting to change their names and operational areas, which is affected by delisting the original company and listing a new entity. Interestingly, four companies sold off their primary assets, paid a dividend to shareholders and then went private as smaller companies, less their main assets, which ostensibly was the only justification for the listing. This reasoning for delisting seemed especially common for holding and property companies. In one case, exchange control regulations hindered an international company from repatriating the capital it had raised. Another reason reported for not being profitable enough to justify being public was changes in capital gains tax rates; the company was in the property industry. Three of the delistings were secondary listings of foreign companies that were withdrawn. Two were related to special acquisition vehicles that had served their purposes. Finally, three companies delisted to effect broad changes in their ownership structures. This is another unique finding from this study regarding delisting activities, which, together with most of the “other” classified rationales, are, as far as the author is aware, unique contributions.

A further descriptive analysis was conducted to confirm the findings and trends identified while attempting to explain the delisting behaviour witnessed; the results of which are contained in Table 4.

Factors identified in the literature that drive delisting that were identified were lower growth opportunities and market momentum for companies, company size, the operating performance of a company, indebtedness, the liquidity of the stock of a company, audit fees and agency issues (Bessler et al., 2023; Marosi and Massoud, 2007). The market-to-book ratio was calculated as a proxy for growth prospects, with a low ratio indicating poor prospects and greater reliance on fundamental valuation factors, while a higher value indicates relatively higher expectations of future earnings and thus momentum for the company in the market (Donnelly, 2014). The debt ratios are also calculated to attempt an explanation of the indebtedness of the different types of delisting firms identified in the content analysis, while the average company size in terms of market value was calculated to explore whether company size was indeed factorial. The net profit ratio and audit fees as a percentage of turnover were also calculated with the theoretical idea that less profitable companies might be closer to liquidation or low growth, while a high audit fee ratio may be indicative of a skewed cost–benefit relationship.

The findings from this analysis on the different categories of delisting firms showed disparities that likely drove the delisting activity. The average market-to-book ratio of acquired firms was 1.78, indicating that acquirers likely bought the companies for their positive prospects in many cases. The relatively high standard deviation and range between minimum and maximum values for the consolidation categories show how it would have been difficult to comprehensively analyse the delisting decision only from a quantitative perspective and highlight the context this study adds to the literature over prior studies (e.g. Liao, 2020). However, the minimum value indicates that there are clearly cases of essentially bankrupt companies (liabilities exceed assets) being acquired, likely due to the perceived value of such a transaction. In contrast, the average market-to-book ratio of liquidated companies was 0.18, appreciably lower than that of acquired firms. Interestingly, for companies citing listing requirements as the reason for delisting, the market-to-book ratio is 0.42, indicating that, on average, these companies are not highly valued, with stock prices well below net asset value. In the case of merged firms, with an average of 0.50, a similar finding can be made and the below book equity valuations in the market likely drive the merger decision. Given that a lower valuation also affects the chances of obtaining favourable equity financing, the finding makes sense in light of the market timing theory, which holds that a company would, in such a case, not require a listing. The average ratio for the companies moving to a smaller exchange is indeed negative, though it is a small sample, and it again indicates probable inefficient valuation from the perspective of the company. Notably, across all categories, the standard deviation of the market-to-book ratio is relatively high and likely not generalisable; nonetheless, the differences between categories are substantial and provide some explanatory evidence, at least regarding the probability that, in some instances, the market-to-book ratio affects the delisting decision in different ways.

The debt ratios across the different outcomes suggest that delisting often occurs due to financial distress. The average debt ratio for acquired firms is 0.56, while that for merged firms is 0.44, in stark contrast to 0.85 for liquidated companies. The ratio for companies citing listing requirements as their reason for delisting is 6.3; however, after excluding three extreme outliers, the ratio drops to 0.68. This result, which is much higher than that for acquired companies, shows that most delisting companies have high borrowings and, despite being listed, are not able to, or are not economically able to, lower their debt ratios. While the results are descriptive and an overview only, a possible inference that can be made when considering the market-to-book ratio and high debt ratios in unison is that these firms are considered low growth, as evidenced by the lower market-to-book ratios and high risk given the high debt ratios and the findings of Donnelly (2014). The average debt ratio of the companies moving to the AltX is very high, and as with the market-to-book ratio, likely unwarranted for inference given the small sample size.

Company size was collected for all delisted companies, with the average company size in the final column of Table 4. A picture of a chasm emerges between acquired and merged firms in this measure. Acquired and merged firms are significantly larger, on average, than other types of companies that delisted. Clearly, there is a substantial difference in the average size of acquired and merged companies compared to all other companies with different delisting rationales. Companies moving to the AltX are, on average, the smallest, justifying their choice to move from the exchange. A quick glance at JSE data shows that auditing costs for many companies amount to R 700,000, and given an average market capitalisation of less than R 8,000,000, it does not seem worthwhile indeed. Companies citing listing requirements on average are worth roughly R 21m, which again justifies the rationales regarding company size. Considered simultaneously with the market-to-book ratio data, these smaller companies are indeed significantly undervalued in relation to their book value, which was a frequent reasoning provided upon delisting. Liquidated companies, on average, had market capitalisations of near R 18m, which is significantly lower than that for acquired or merger companies. This, however, makes sense as the companies generally are near bankruptcy in their final year of being listed. This includes voluntarily liquidated companies; however, given the relatively low valuations and the high cost of maintaining a listing, the decision to delist seems rational.

Audit fees (expressed as a percentage of turnover) differed meaningfully across the different types of delistings and acted as a proxy for listing costs. The average cost for acquired firms is 0.38% of turnover, while the amount rises for the other categories of delisted companies. For liquidated companies, the costs on average amounted to nearly 1% of turnover, while for companies that cited high listing requirements, it averaged 0.66%. It is, however, important to note that the average acquired company was profitable at the time of delisting; however, for the average, citing listing costs as the primary reason for delisting, the opposite is true. Considering the standard deviation and the average listing costs for companies that cited listing requirements as onerous means that indeed listing costs could often reach amounts of roughly 1.5% of turnover; it is a high cost, especially considering the average company in this category is loss-making, without reasonable future growth prospects and has significant debts.

The overall picture at the time of delisting, in terms of profitability, presents a stark difference between acquired companies and other categories. On average, acquired companies had a positive net profit margin of 28%, while the average ratio for all other categories is negative. Specifically, for liquidated companies, the ratio is near −40%, while companies citing listing requirements had an average margin of −31%. When considered together with the market-to-book ratios of these companies, which are, on average, well below zero, it would not make sense to remain listed; the cost–benefit relationship would not be sensible, and it is questionable whether these companies would be able to raise financing on favourable terms.

The findings of this descriptive aspect of the analysis add another layer of information to the understanding of what drives delisting on the JSE. The primary result hereof is that companies with good growth prospects and healthy profit margins seemingly tend to be acquired. This is the primary driver of delisting from the JSE. This is a finding that adds to the literature on the topic, as many prior studies did not consider acquisitions. There were some clear instances where acquisition was used either to “scoop up a bargain” or as a sale preferable to liquidation, however. In line with previous studies that studied the factors that drove delisting, the analysis shows that, seemingly, at the time of delisting, low growth prospects, low profits or losses, high debt levels and the cost of maintaining a listing are indeed primary drivers of delisting.

This analysis also provided insights into the consolidation activity that drives delistings by showing that there are differences between the profitability, company size, leverage and audit costs for acquired companies when compared to companies delisting due to the cost of listing. It was, however, a descriptive overview of the final year of the companies being listed and is likely a final snapshot of the state of the company prior to delisting. Considering this, some understanding of what drives delisting may have been lost due to the cross-sectional nature of this analysis. A further longitudinal analysis was conducted using a panel of the data; in other words, the above ratios and measures were analysed on a company-per-year basis. This was done with the entire data set that could be gathered for each company post the year 1995 up to the delisting date.

The reason for each company’s delisting was recorded in the content analysis section of this study. A descriptive analysis of each company and its main delisting categories was then performed at the time of delisting. While this descriptive analysis ties the content analysis to the main reasons for delisting as found in prior studies, a more detailed analysis of what company characteristics are tied to which type of delisting is explored and inferred, but not quite established. To this end, data consistent with the prior descriptive analysis detailing the key characteristics influencing the delisting decision were collected over time. This was then merged with the reasons for delisting from the sample in this study. In this manner, 11,023 company/year records were gathered, of which 4,800 were dropped due to not being complete enough to calculate the necessary ratios. This left us with a sample of 6,223 company/year observations. Within this data set, there were 40 extreme outliers that skewed the data, specifically with regard to the net profit margin; these values were dropped, too, leaving a sample of 6,183 company/year observations.

Given the categorised nature of the data, an appropriate regression method was identified to describe the data. Multinomial logistic regression was used, with the regression effectively split between delisting reasons; in other words, a logistic regression was run for each delisting rationale grouping. The results of the regression on a per-rationale basis provided interesting insights to further explain the results of the descriptive and content analyses. For brevity, an overview of the regression analysis is provided in Table 5. However, the full results are reported in  Appendix. It is important to note that only the categories of delisting that were likely to have been influenced by the variables identified in the prior literature (as in the descriptive overview) were tested; for example, changing the name of the company is a reason for delisting that is newly reported in the study, but within the wider identified framework is not something driven by the theory in the field. The model statistics indicated that the model explains the variance between categories well.

The regression model took the form:

where DLR denotes the various reasons for delisting and forms the categories for the analysis (acquired, listing requirements, liquidation, merged, moved to the AltX or other voluntary reasons).

X is comprised of the debt ratio, company size, audit fees to turnover ratio, market-to-book ratio and net profit margin and e is an error term.

The results of the regression analysis show the model’s trends and fit across the various delisting categories, as in the descriptive analysis. The method of regression analysis differs somewhat from conventional methods in that it predicts a categorical outcome rather than giving an ordinal result. In other words, it provides a fit of the data that describes the sample. In contrast to the descriptive analysis of the driving factors that describes the data at the time of delisting, the regression analysis is fit over time and therefore provides another layer of understanding of the delisting decision on the JSE. Because the regression technique used is logistic regression, it predicts the odds of a factor influencing the odds of being in a specific category relative to other categories. A positive coefficient indicates a greater propensity to be in a specific category, and a negative coefficient, the opposite.

The results are interesting because there are stark differences in the descriptive analysis at the time of delisting. It is important to note that the regression analysis uses much longer data samples for many delisted companies, and that the descriptive analysis is a snapshot of the company at the time of delisting, when comparing the results of the two analyses.

Being acquired had positive coefficients only for company size and audit costs, with company size having a highly significant negative relationship to being acquired. In other words, acquired firms are much less likely to face high audit costs relative to their turnover, while company size significantly affects the likelihood of being acquired. Merged companies, however, had a significant negative relationship with leverage and no relationship with audit costs.

For companies delisting due to listing requirements, there is a strong negative coefficient on the debt ratio, indicating that, compared to companies in other categories, there is a strong negative relationship with leverage. Fittingly, however, for this category of company, there is indeed a strong, significant, positive association between listing costs and delisting due to listing costs.

For liquidated companies, there was a significant positive association between the debt ratio and this category, with a small but significant positive relationship with company size and a small but significant negative relationship with profitability.

Companies that moved to the AltX had a big, significant negative relation to leverage but a small significant relation to company size and a positive relationship to listing fees.

Finally, for other categorised companies, the analysis showed a small, positive, significant relationship to company size and a sizable, positive, significant relationship to listing costs.

The overall picture is, however, clear, given the results. The data at the time of delisting confirms many of the findings of the content analysis; however, when taking a longer-term view using longitudinal data, the factors driving delisting are less clear and still mostly align with the rationales companies provide upon delisting.

It is worth noting that the pseudo-R² of the regression analysis, a measure of how well the model fits the data, is quite low at 0.026. This indicates that the regression model does not fully capture the effects of the various financial variables on the delisting decision and would not accurately predict it, as there is a large amount of unexplained variance not captured by the model. While the insights from the regression analysis are interesting and, together with the cross-sectional analysis, show that certain financial and quantitative factors are indeed key in driving the delisting decision, much remains uncaptured by these models. This reinforces the main idea of this paper: to provide a better understanding of the delisting decision on the JSE by offering a more holistic picture of why companies delist.

The results from the content analysis show that the primary driver of delisting on the JSE is consolidation, which accounted for 57% of all cases. This is in line with the findings of Doidge et al. (2017) for the US exchanges. Prior studies on the JSE either did not quantify delisting activity due to consolidation or reached very different conclusions, likely because they studied a narrower time period than this study (Liao, 2020; Nikani and Holland, 2022). The JSE had a similar fall in listings to the US exchanges studied by Doidge et al. (2017), albeit very likely due to different reasons. While the US exchanges are facing competition from private equity and technological advancements, this does not seem to be the case in South Africa (Nikani and Holland, 2022). This study was the first to provide a comprehensive overview of all types of delisting on the JSE and then also to add to our understanding of what drives delisting activity on the exchange. While some previous studies did not consider consolidation activities as voluntary reasons for delisting, the magnitude thereof cannot be ignored and contrasts with some narratives regarding the matter. There are arguments to be made with regard to the in/voluntary nature of delisting due to certain types of acquisitions; however, it was impossible to discern from the data when takeovers were hostile and involuntary on the part of the firm’s management. This would make an interesting future area for research. In some of the cases where companies were liquidated, the rationales provided stated that possible acquisitions were explored prior to bankruptcy. Therefore, it is probable that at least some of the consolidation activity was driven by liquidity issues on the part of the acquired companies; however, the further analysis did not show this to be the general case, and it remains that consolidation is the primary driver of the dearth of listings on the exchange.

In terms of voluntary delisting, excluding consolidation motives, in line with prior studies, the reasons provided for delisting are mostly concerned with listing costs and other factors that affect primarily smaller firms. This somewhat resonates with the findings of Nikani and Holland (2022) that the JSE is more suited to larger firms currently than may have been the case in the past. The secondary reasons provided, such as being too small or having undervalued share prices, are similar to the reasons reported on international exchanges and the JSE; however, some new insights and reasons for delisting were also found (Martinez and Serve, 2017; Nikani and Holland, 2022; Marosi and Massoud, 2007). Some companies were found to have moved over to the AltX, an exchange better suited to medium-sized companies. Some 2% of delisting activity was found to be due solely to a change of name, where companies delist and relist. Tellingly, around 3% of companies specifically mentioned delisting due to negative sentiment towards smaller businesses on the bourse. A further novel finding was the breakdown between local and international consolidation, with 82% of consolidation driven by local transactions.

Liquidation or bankruptcy was cited 12% of the time. This is in contrast to the findings of Liao (2020), who only found a small number of companies providing this reasoning. This may be due to the aggregation service or the difference in the study period used in Liao (2020). The high incidence of liquidations on the bourse has implications for the risk profile of the exchange and asset pricing thereon.

As in Bessler et al. (2023), 2% of delisting activity from the JSE is ascribed to companies leaving the exchange for its smaller sister exchange, where the listing requirements are slightly less onerous and the market caters to smaller-sized firms. No prior studies have explored this aspect of the delisting process on the JSE. These companies, although difficult to describe accurately due to the small sample, clearly were on average the smallest encountered in the study, with market capitalisations of less than R 8m on average; thus, the rationale driving this makes sense in light of the cost of maintaining a listing.

Further to this, there are few emerging market studies around the topic, possibly due to emerging markets usually having growing listings as economies develop; however, there are quite a few developing countries with shrinking listings (Doidge et al., 2017). This study added a broad range of rationales and provided an overview of why companies delist in an emerging market setting. It is also to the best knowledge of the author, the first study to give a holistic overview of all the reasons for the large amount of delistings from the JSE.

A further analysis was done with a descriptive analysis at the time of delisting as well as a logistic regression that explored the differences in characteristics of the drivers of delisting as identified in the literature review, over a period of time. The descriptive analysis shows clear differences between the composition of the different groups of companies (according to their reasons for delisting). The descriptive analysis considered some characteristics of delisted companies in their final year of being listed and found that acquired companies are, on average, profitable, have growth opportunities, relatively low debt ratios and proportionally lower audit costs. On average, then, acquired companies are profitable, growing concerns and seemingly, the majority of delistings were due to such companies being bought, likely for the growth prospects and possibility of future profits generated. Liquidated companies on average had a very high debt ratio compared to the other categories identified in the content analysis section. These companies also faced the highest listing costs compared to their turnover and were, in their final listed year, making steep losses, which tallies well with the identified reasons recorded for their delisting. Companies citing listing requirements as their primary reason for delisting, on average, had poor growth prospects, high debt ratios, were unprofitable and faced high listing costs in their final year of listing. This contrasts with the prospects of acquired companies and aligns well with the rationales explored in the content analysis. Similar characteristics were recorded for companies moving to the AltX, but exceptionally high listing costs compared to turnover generated were seen, which explains the motive to move to a smaller exchange with less onerous listing requirements. The correlation between the recorded reasons from the content analysis and the descriptive analysis of financial measures provides a measure of robustness to the study.

The findings from the regression analysis provided longer-term inferential evidence, namely, that even outside of a final-year snapshot or possibly subjective reasoning from firm-side narratives, the drivers of delisting are observable over a substantial period of time. In the regression analysis, it was found that acquired firms tend to have a large negative relationship to listing costs; in other words, listing costs are inversely proportional to turnover in these cases, which, given the descriptive analysis’s findings regarding company size at the time of delisting, makes sense. Companies citing listing requirements face higher listing costs over their listed life than companies citing other reasons for delisting, except for those that moved to the AltX, which aligns well with the findings of the literature review and prior studies. Taken together with the descriptive analysis at the time of delisting, these companies face high listing costs over their listed life and then a very high burden and low profitability at the time of delisting, which explains the high incidence of delisting for this reason. Interestingly, companies citing other reasons for delisting, on average, also faced high listing costs over time, which implies that despite other reasons being given, such companies might have also not benefitted from being listed, despite it not being their primary reason for delisting.

The regression analysis also showed that liquidated companies had a positive relationship with leverage and a negative relationship with profitability, indicating that higher debt ratios and lower profitability over the entire period of being listed led to eventual delisting due to bankruptcy or falling short of listing requirements. The result of the longitudinal analysis confirms many of the key aspects identified in the content analysis and, overall, adds to the robustness of the study. When companies report their delisting reasons, there is clearly little to doubt regarding the authenticity thereof, given the similar trends identified. However, the richness of the rationales allowed for the study of layers of reasons and the identification of new reasons for the drop in listings on the JSE.

Delisting activity on the JSE peaked in the early 2000s, seemingly due primarily to consolidation, liquidations and listing requirements. After this period, the delisting activity has been relatively stable. However, the number of listings on the JSE has dropped from nearly 900 in the early 1990s to fewer than 300 currently; therefore, the pool of companies eligible for delisting is smaller. Regardless, delisting activity amounted to a maximum of 3% of listed companies per year over the past five years, whereas up to 20% of the exchange delisted in a single year in the early 2000s. This context is important to understand the findings of this study. The primary finding of this paper is that consolidation was the primary driver of delisting activity on the JSE, and an important addition to the literature is that liquidations are more frequently drivers of delisting activity than previously found (Liao, 2020). No previous studies documented companies delisting from the JSE to move to the AltX. This study showed that, although infrequent, it accounts for some delisting activity, as seen in other markets (Bessler et al., 2023).

Another important finding was that smaller, less liquid companies with lower growth prospects comprised the average delisting company when listing requirements, liquidation or a move to a different exchange were cited as the rationale for delisting. Companies that were acquired or merged, on average, were substantially larger than companies that delisted for any other reason. Confirmatory descriptive evidence was provided in this study to show that the rationales for delisting provided in final SENS announcements and circulars are indeed in line with what is observed in terms of firm characteristics in the final listed year. A regression analysis confirmed that, over time, there were significant differences between acquired companies and other categories of delisted companies, as identified through content analysis. Importantly, listing costs were found to be a significant factor for companies that delisted primarily due to listing requirements. Similarly, liquidated companies showed a relationship with higher leverage and an inverse relationship with profitability. Considering the cost of maintaining a listing and the aggregate unfavourable valuations they faced, the bulk of companies that delisted for any reason other than consolidation seem to have gone private due to cost pressures, high leverage and an inability to adjust financing at a favourable rate.

While consolidation was found to be the primary driver of delisting on the JSE, the cost of maintaining a listing was indeed found to be a factor in liquidations, cases where the cost–benefit ratio is skewed towards the costs of the listing and in cases where companies moved to the smaller company-positioned AltX. Listing costs play a role for many delisted companies, ostensibly in up to 40% of cases. This is a double-edged sword for a stock exchange; maintaining a high quality of listings with a focus on reliable information, liquidity of the stocks and a robust regulatory framework comes with a cost of fewer listings. However, these measures serve to protect investors. A smaller pool of stocks to invest in, however, impacts diversification and very likely the co-movement of stocks, as there are fewer companies with different sets of circumstances. It may also discourage start-ups from listing on the exchange, denying retail investors the opportunity to invest in new technologies and innovations and potentially leading to suboptimal capital allocation in private markets due to inefficiencies in the market pricing mechanism. Conversely, it may discourage investors when there are few new investment opportunities to consider, or when one’s current holdings tend to delist, leaving some shareholders with over-the-counter shares and, consequently, less liquid assets. While it would be difficult to recommend a relaxation of listing requirements, other possible avenues could be explored, for example, a revamp of the AltX with more relaxed requirements and greater marketing to offer a more attractive haven for smaller companies that struggle to afford the listing costs or possibly discounts on costs and relaxed requirements for the initial period of listing. The regression analysis conducted in this paper shows that listing costs are influential throughout the life of many companies that end up delisting, not only at the time of delisting; such a change may allow these companies to ramp up profitability before being subject to the full listing costs.

In a country with a very high unemployment rate and significant inequality, growth opportunities are important and efficient platforms for raising capital could be instrumental to the country’s further development. Conversely, the large spate of delistings due to liquidity concerns is concerning, as it might further exacerbate these issues. Furthermore, given the cost of maintaining a listing, growing companies may be discouraged from raising capital on the bourse, which could hinder growth. At the same time, the oft-mentioned notion that the stock exchange and its wider stakeholder community are not focused on smaller businesses may have created a perception to that effect, leaving growing or newer companies out of the equity capital markets. Effective measures to entice growing companies to list on the exchange might lead to better capital raising and subsequent growth of such companies, which in turn would likely affect the overall growth of the economy.

Measures to lower listing costs and entice entrants into the capital markets will, hopefully, address these issues in the future. Given the findings of this study, it would be worth arguing that lowering the cost of listing might encourage more companies to remain listed and attract new listings. Currently, the JSE has implemented its listing simplification project, which significantly reduces the requirements for becoming listed and for maintaining a listing, raising cash, reporting interim results, meeting reporting deadlines and locating information. It seems to be a step in the right direction. Another dimension of many of the delistings not due to consolidation was due to liquidity and share price growth; many companies cited scant analyst coverage and thin trading of their shares as reasons to delist. Increased marketing, interaction with media houses to put a spotlight on the value that investments in smaller-capitalisation companies can offer, and possibly greater training and educational outreach might entice more analysis and interaction with smaller companies on the exchange.

Future studies could explore another dimension of the listing issue on the JSE, the propensity to list. This study explored the rationales for delisting, but there may be other reasons why companies do not list on the JSE to begin with, thereby essentially replacing delisted companies. The impact of liquidity funding raised according to the reason for delisting was not explored in this study as there had to be a delineation of the study parameters; however, it would make an interesting study to note whether companies that list on the JSE indeed raised substantial funds and/or were able to effect significant changes to their capital structures. Another possibility is to track executives who were part of the decision to delist and interview them or conduct a survey to understand the reasons that led them to the delisting decision. Another study could juxtapose today’s delisting (and/or new listing) situation with the effects of the listing simplification project, sometime after its implementation.

The author wishes to thank three anonymous reviewers and the assistant editor of the journal for helpful comments and recommendations to improve the paper.