I think that is a matter of the boat builders preference. Diesel's don't like back pressure. Gasoline engines need some back pressure to work well so when you see a wet exhaust
at the stern with a diesel
engine in the boat, you will see 4" or more depending on the displacement
of the engine.
In your picture i would guess that's a 2" exhaust and since it's a short run probably very little back pressure. Aside from the sound coming from the side vs stern, there is no real advantage as long as no back pressure is allowed.
You could change yours but I'd consult with the engine mfg as to size for that length. Do you have a water lift muffler
? If you do, a larger one might be necessary for a longer run.