Stock delisting refers to the loss of qualification for a company to trade shares on the stock exchange. If stocks are delisted, companies cannot buy and sell stocks on the stock exchange, and their credibility and value may decrease.
There are various reasons for delisting stocks. The most common reason is when a company's financial situation worsens and does not meet the delisting requirements. Also, if a company's management commits a fraud, it can be delisted.
If the stock is delisted, investors will not be able to dispose of their shares. In addition, companies cannot raise funds on the stock exchange, which can make it difficult for companies to grow.
The delisting of stocks negatively affects both companies and investors. Therefore, companies should thoroughly manage their finances and make efforts to raise ethical awareness among management to prevent delisting.
The delisting of the shares could result in the following losses for investors.
a decline in the value of stocks
If the stock is delisted, the value of the stock may fall. This is because the value of stocks held by investors may fall and cause losses.
suspension of dividend payments
Companies will not be able to raise funds on the stock exchange, so they may not pay dividends. This could result in losses for investors because they cannot receive dividends.
a decline in investor confidence
Business confidence may decline. This is because investors do not invest because they lose trust in companies. A delisting of shares could result in the following losses for a company.
difficulty in raising funds
Companies cannot raise funds on the stock exchange, which can make it difficult for them to grow.
a decline in corporate value
The value of a company may decline. This is because investors do not invest in companies due to a decline in corporate confidence.
the resignation of the management
Management can step down. This is because management is responsible.
The delisting of stocks negatively affects both companies and investors. Therefore, companies should thoroughly manage their finances and make efforts to raise ethical awareness among management to prevent delisting.
How Investors Deal When Stock Is Delisted
dispose of stocks
Because the value of the stock may fall, investors can dispose of the stock to minimize losses.
hold shares
Investors can make long-term investments by holding shares, as companies that have been delisted are likely to be re-listed.
get counseling through a securities firm
Investors can be consulted through securities firms to minimize losses.
The delisting of stocks negatively affects both companies and investors. Therefore, companies should thoroughly manage their finances and make efforts to raise ethical awareness among management to prevent delisting. Investors can deal with the delisting, such as disposing of, holding, or consulting through securities firms to minimize losses.
