Why Pioneer Delisted Its ADRs from NYSE (PIO)

Jan.25.06 | About: Pioneer Corp. (PNCOF)

Pioneer (former ADR ticker: PIO) officially delisted its ADRs yesterday from the New York Stock Exchange. It also has submitted applications to delist its shares from Euronext Amsterdam and the Osaka Securities Exchange. For American investors, Pioneer ADRs' final day of trading was last Friday and its shares were delisted prior to the start of trading Monday. Below I have included some comments on why Pioneer is no longer trading on the NYSE and a link to information from Pioneer for your reference.

Why did Pioneer delist and why is it delisting from other exchanges? The plain and simple answer is costs. Pioneer announced a restructuring plan back in December and decided to delist its shares in order to reduce fixed costs. Pioneer first listed its ADRs in December of 1976 at a time when Japanese consumer electronics firms were trying to prove themselves and increase brand awareness. Today, consumer electronics remains a cut-throat competitive industry and brand awareness is as important as ever; however, cost-cutting is an even more important goal for many firms in order to remain competitive.

I have seen an increase in the amount of concern by Japanese and other foreign firms with ADRs (ADSs) and those that are contemplating an IPO that are worried about the implications of Sarbanes-Oxley. From what I understand, ADRs for the most part are immune from Sarbanes-Oxley. However, there are three levels of ADRs and those listed on the NYSE or NASDAQ are most likely subjected to more stringent requirements by law and by the exchanges themselves. The costs associated with a foreign listing are also reason for some firms to reconsider as Pioneer has done. Lastly, the accounting standards, (SEC) filing requirments and exchange listing requirements in the U.S. are almost always stricter than those of a foreign firm's home country and this applies to Japanese firms as well. The good news for investors is that Japanese securities law is beginning to incorporate some of the U.S. standards such as mandatory quarterly reporting. We may also see a formal securities commission established similar to the SEC after the fallout of the "Livedoor shock." Currently securities are regulated/monitored by a division within Japan's Financial Services Agency.

Link to announcement from Pioneer regarding its delisting and information for ADR holders.