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.