Going public in China: Reverse mergers versus IPOs on Chinese markets

Zijian Cheng, Grant Fleming, Zhangxin Frank Liu

Research output: Chapter in Book/Conference paperChapterpeer-review


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 languageEnglish
Title of host publicationThe Oxford Handbook of IPOs
EditorsDouglas Cumming
Place of PublicationUSA
PublisherOxford University Press, USA
Number of pages18
ISBN (Electronic)9780190614577
Publication statusPublished - 1 Jan 2018


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