Unmasking Delistings: A Multifactorial Analysis of Financial, Non-Financial and Macroeconomic Variables

The stability of financial markets is influenced by the strength and transparency of companies listed on stock exchanges. This paper explores how financial, non-financial, and macroeconomic factors influence delisting likelihood among companies listed on the Johannesburg Stock Exchange (JSE), addressing a limitation in the current body of knowledge that often overlooks the combination of these factors, especially within the context of developing economies. Using a sample of 302 companies delisted between 2010 and 2023, and 302 as a control group, we analyzed 72 variables through a multivariate panel probit regression model. Our findings reveal that delisting decisions are driven by a complex interplay of financial health, governance practices, and macroeconomic conditions. Financial health, including liquidity and market valuation, is crucial in mitigating delisting risk. Non-financial factors, such as corporate governance and shareholder composition, further reduce the likelihood of delisting. Macroeconomic conditions, including inflation, and interest rates, introduce significant external pressures. This study is especially relevant in developing economies like South Africa, where economic volatility adds risks for listed companies. The results provide insights for companies, investors, regulators, and policymakers to ensure a stable and robust stock market and financial system and identify early warning signals for delisting.