Abstract
This chapter provides an analysis of companies undertaking a reverse merger (RM) as opposed to an initial public offering (IPO) on Chinese stock markets. It introduces a new data set of RMs on Chinese exchanges to examine the financial characteristics of firms that choose an RM over an IPO. The authors find that Chinese RM firms have lower liquidity, higher leverage, and lower asset turnover than firms that go public through an IPO. Promoters of Chinese RM firms also hold more shares as compared with IPOs. Finally, Chinese RM firms have higher return on assets and lower underpricing at listing. The results identify several characteristics of Chinese RM firms that differentiate them from firms that go public via an RM in Western markets, suggesting that Chinese institutions and stage of stock market development may impact the decision to go public.
| Original language | English |
|---|---|
| Title of host publication | The Oxford Handbook of IPOs |
| Editors | Douglas Cumming |
| Publisher | Oxford University Press, USA |
| Pages | 283-300 |
| Number of pages | 18 |
| ISBN (Electronic) | 9780190614577 |
| DOIs | |
| Publication status | Published - 1 Jan 2018 |
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Going public in China : Reverse mergers versus IPOs on Chinese markets. / Cheng, Zijian; Fleming, Grant; Liu, Zhangxin Frank.
The Oxford Handbook of IPOs. ed. / Douglas Cumming. Oxford University Press, USA, 2018. p. 283-300.Research output: Chapter in Book/Conference paper › Chapter
TY - CHAP
T1 - Going public in China
T2 - Reverse mergers versus IPOs on Chinese markets
AU - Cheng, Zijian
AU - Fleming, Grant
AU - Liu, Zhangxin Frank
PY - 2018/1/1
Y1 - 2018/1/1
N2 - This chapter provides an analysis of companies undertaking a reverse merger (RM) as opposed to an initial public offering (IPO) on Chinese stock markets. It introduces a new data set of RMs on Chinese exchanges to examine the financial characteristics of firms that choose an RM over an IPO. The authors find that Chinese RM firms have lower liquidity, higher leverage, and lower asset turnover than firms that go public through an IPO. Promoters of Chinese RM firms also hold more shares as compared with IPOs. Finally, Chinese RM firms have higher return on assets and lower underpricing at listing. The results identify several characteristics of Chinese RM firms that differentiate them from firms that go public via an RM in Western markets, suggesting that Chinese institutions and stage of stock market development may impact the decision to go public.
AB - This chapter provides an analysis of companies undertaking a reverse merger (RM) as opposed to an initial public offering (IPO) on Chinese stock markets. It introduces a new data set of RMs on Chinese exchanges to examine the financial characteristics of firms that choose an RM over an IPO. The authors find that Chinese RM firms have lower liquidity, higher leverage, and lower asset turnover than firms that go public through an IPO. Promoters of Chinese RM firms also hold more shares as compared with IPOs. Finally, Chinese RM firms have higher return on assets and lower underpricing at listing. The results identify several characteristics of Chinese RM firms that differentiate them from firms that go public via an RM in Western markets, suggesting that Chinese institutions and stage of stock market development may impact the decision to go public.
KW - China
KW - IPO
KW - Leverage
KW - Liquidity
KW - Return on assets
KW - Reverse merger
KW - Underpricing
UR - http://www.scopus.com/inward/record.url?scp=85061748832&partnerID=8YFLogxK
UR - http://www.oxfordhandbooks.com/view/10.1093/oxfordhb/9780190614577.001.0001/oxfordhb-9780190614577
U2 - 10.1093/oxfordhb/9780190614577.013.26
DO - 10.1093/oxfordhb/9780190614577.013.26
M3 - Chapter
SP - 283
EP - 300
BT - The Oxford Handbook of IPOs
A2 - Cumming, Douglas
PB - Oxford University Press, USA
ER -