A paper titled, “The Impact of Exchange Listing on Corporate Governance Evidence from Direct Listing,” written by Dan French, Andrew Kern, Thibaut Morillon, and Adam Yore, considers the impact on corporate governance policies attributable to the listing of a class of securities on a national securities exchange.  The authors focus on direct listings and challenge the notion that companies that undertake direct listings may not adopt investor protections and governance practices due to the absence of underwriters that typically act as gatekeepers.  The authors examine public non-listed REITs that undertake a listing, or “transitioning REITs.”  By doing so, the authors attempt to demonstrate the value of a listing without an offering, or a direct listing.  The authors consider various data points, including board size, board independence, nominating and compensation committee independence, etc., in order to draw comparisons between public non-listed REITs and transitioning REITs.  Transitioning REITs even before listing on a securities exchange already meet many of the governance standards of the securities exchanges.  This suggests that the REITs that undertake direct listings already have characteristics associated with public companies.  In addition, once listed on exchanges they ave significant institutional stockholders, and this serves to reinforce the heightened governance standards.  The authors conclude that even without the benefits of the traditional IPO process, companies that undertake direct listings have comparable governance standards.  The authors note that “changes in corporate governance occur gradually through time as opposed to abruptly just after the listing event.”

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