Delisting Risk and Corporate Strategic Choice: Evidence from China's Gradual Delisting Regime

Against the backdrop of the gradual reform of China's delisting regime, this paper provides an in-depth examination of the impact of delisting risk on corporate strategic choice. The results show that listed companies facing delisting risk tend to adopt more aggressive corporate strategies, and that the greater the degree of delisting risk, the more aggressive their strategic choices become. Mechanism analysis indicates that delisting risk increases corporate strategic aggressiveness primarily by enabling firms to obtain more government subsidies, increasing managerial risk-taking, and triggering leadership changes in listed companies. Further analysis shows that listed companies facing delisting risk or a higher degree of such risk are more likely to shift from an analyzer strategy to a prospector strategy; the gradual reform of the delisting policy increases corporate strategic aggressiveness; and listed companies in the decline stage are more likely to adopt aggressive corporate strategies when facing delisting risk. Moreover, the positive effect of delisting risk on corporate strategic aggressiveness is more pronounced among listed companies with more slack resources, lower market position, operations in regions with a lower degree of local protection, and non-high-tech status. An analysis of economic consequences shows that listed companies facing delisting risk can significantly improve their future performance by implementing aggressive corporate strategies. This study reveals the internal mechanism underlying firms' strategic choices under delisting pressure and provides important implications for advancing the development of China's capital market fundamental institutions and corporate strategic management practice.