IPOs and direct listings (DLs) offer two different mechanisms for firms to go public. In contrast to IPOs, DLs do not employ an underwriter or raise new capital. Using a sample of IPOs and DLs on major stock markets in the European Union, we document that firms that choose to go public via DLs are larger, more profitable, and less levered, on average, than IPO firms. These pre‐listing differences suggest that DL firms should be less risky than IPO firms; however, controlling for this selection effect, we find that DLs have higher aftermarket price volatility than IPOs. This is consistent with some policy‐makers' concerns that, because they lack an underwriter, DLs expose investors to higher risk than IPOs in the immediate post‐listing period. We show that this heightened price volatility persists, on average, for the first 20 trading days after listings, and is larger in industries where listed peer firms provide relatively low‐quality disclosures. Our results provide new evidence regarding the types of firms that choose to list via DLs versus IPOs and the riskiness of IPOs versus DLs in the immediate post‐listing period; additionally, our results are consistent with underwriters improving the quality of information available to investors for IPO firms in the pre‐listing period.

This study documents that M&A delistings are associated with a deterioration in the quality of analysts’ information environment for industry peer firms, measured by an increase in analysts’ absolute forecast errors and dispersion. This effect persists for six quarters and is larger when the delisting target firm contributes relatively more to the industry information environment. Further, we find that, among analysts forecasting earnings for an industry peer firm, those who also followed the delisted target firm in the pre-M&A period experience a larger increase in their absolute forecast errors. A comparison based on public versus private target firms also suggests that the loss of target firms’ public disclosures plays a role in the deterioration in the quality of analysts’ information environment. In additional analyses, we find evidence consistent with this effect resulting from a deterioration in analysts’ ability to exploit across-firm information complementarities.