The Impact of Reverse Merger on Stock Price Behavior – Evidence in Taiwan Market

  • 何 宣儀

Student thesis: Master's Thesis

Abstract

Reverse merger make it possible for private companies to go public through merging of listed shell firms This method is completely different as compared to the traditional IPO process Private firms can achieve the purpose of going public at a relatively quick rate that is relatively low cost using reverse merger In this research 58 reverse merger cases in the Taiwan market from 2007 to 2017 were collected Of the 58 shell companies 21companies are TWSE-listed and 37 companies are TPEx-listed In addition 40 shell companies changed to different industries after being merged by private firms whereas the remaining 18 shells remained in their original industries Our research result shows that shell companies may be the target in reverse mergers mainly because of their poor financial performance and operating conditions before being merged As a result the original management may has no intention to continue operating the companies Additionally we also find that the stock price of shell companies that change their industries after reverse mergers will cause a fluctuation phenomenon compare to other similar public firms Furthermore we utilize the event study method to examine the abnormal returns surrounding reverse mergers We find that a positive abnormal return exists both before and after the announcement date of a reverse merger
Date of Award2018 Jun 14
Original languageEnglish
SupervisorHsuan-Chu Lin (Supervisor)

Cite this

'