What is the impact of a conflict delisting on firm value? An investigation of the role of conflict and firm characteristics

Negotiations between manufacturers and retailers often go sour. In an attempt to stand their ground, firms increasingly exercise coercive power and decide to delist products until the conflict is resolved. Using an event study, this paper provides knowledge on the performance implications of these so-called conflict delistings. While the results show that, on average, conflict delistings severely damage firm value, the direction and magnitude of the stock market reaction is contingent upon conflict and firm characteristics. Conflict delistings are more harmful to firm value if the focal party is a manufacturer (versus a retailer) or the initiator of the delisting. They also harm firm value more when more brands were delisted and when the size of the focal firm is much larger than the opponent’s size. A conflict delisting is more beneficial if the focal party has a strong brand and if the opponent’s brand strength is weak