Premium
Option Delisting of Stocks That Continue Trading: An Examination of Welfare Effects
Author(s) -
Bartunek Kenneth S.
Publication year - 1996
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1996.tb00887.x
Subject(s) - volatility (finance) , welfare , business , monetary economics , sample (material) , abnormal return , economics , financial economics , econometrics , finance , stock exchange , chemistry , chromatography , market economy
This paper addresses the resulting effects from the delisting of options on underlying stocks that continue to trade. The evidence generally supports the argument that options in this sample are delisted as a result of financial difficulty and/or a lack of interest. An insignificant average abnormal return and a small significantly negative average standardized abnormal return are observed around the delisting date, but the average price effect is determined to be considerably less than the normal discrete trading intervals at which stocks trade on exchanges. There are no effects found on volatility measures directly attributable to option delisting.