All Roads Lead to Rome—Reverse Merger Financing

2016 ◽  
pp. 127-136
Author(s):  
Jiazhuo G. Wang ◽  
Juan Yang
Keyword(s):  
Reverse Merger

Internal Control Deficiency Disclosures among Chinese Reverse Merger Firms

Abacus ◽  
2016 ◽  
Vol 52 (3) ◽  
pp. 441-472 ◽  
Author(s):  
Juan Mao ◽  
Michael Ettredge
Keyword(s):  
Internal Control ◽  
Reverse Merger

Impact of the liability of foreignness, domicile of incorporation and an institutional change on reverse merger firms’ capital-raising performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ho Wook Shin ◽  
Seung-Hyun (Sean) Lee ◽  
Min-Jung Lee
Keyword(s):  
Institutional Change ◽  
International Business ◽  
Initial Public Offering ◽  
Design Methodology ◽  
Liability Of Foreignness ◽  
Entry Barrier ◽  
Content Type ◽  
Reverse Merger ◽  
The Usa ◽  
Public Offering

Purpose The purpose of this study is to examine how the liability of foreignness (LOF), choice of incorporation and an institutional change independently and jointly affect a reverse merger (RM) firm’s capital-raising performance. Design/methodology/approach The study draws on the data of shell reverse merger transactions in the USA from 2007 to 2016. Findings This paper finds that LOF and the choice of incorporation as a signal have a significant effect on RM firms’ capital-raising performance. In addition, this study finds that the effectiveness of the signaling can be affected by LOF. Finally, this paper finds that an institutional change that lowers the entry barrier to the initial public offering (which is a superior alternate to an RM) affects the impacts of LOF and signaling on RM firms’ capital-raising performance. Originality/value The study contributes to the international business literature by examining the RM (which has been an under-researched topic in the literature) by drawing on the LOF framework. The study finds that LOF and the choice of state for incorporation affect RM firms’ capital-raising performance; moreover, these relationships are affected by an institutional change.

Cupcakes by Lizbeth: flash in the baking pan or here to stay

2014 ◽  
Vol 10 (2) ◽  
pp. 145-155
Author(s):  
Sambhavi Lakshminarayanan ◽  
Savita Hanspal
Keyword(s):  
Business Strategy ◽  
Swot Analysis ◽  
Married Couple ◽  
Strategic Choices ◽  
Publicly Traded ◽  
Undergraduate Level ◽  
Content Type ◽  
Secondary Sources ◽  
Reverse Merger ◽  
Competitor Analysis

Synopsis Cupcakes by Lizbeth (CBL) was a “gourmet” cupcake‐focussed retail store chain founded by a married couple. Eight years after opening, CBL used the relatively uncommon process of a “reverse merger” to become publicly traded. At that time, it had seemed as if CBL was on track to be the largest among cupcake focused businesses. However, financial setbacks as reported by the company and change in top management gave reason for pause and closer examination. Did the CBL business model have staying power or did there need to be a serious reconsideration of the company's strategic choices? Research methodology This case was prepared from secondary sources. Relevant courses and levels This case is appropriate for courses in strategy and management at the undergraduate level. Theoretical basis Competitive positioning, competitor analysis, operations strategy, SWOT analysis, planning business strategy, business expansion (franchising vs company owned).

Private Class Action Litigation Risk of Chinese Firms Listed in the US

2017 ◽  
Vol 07 (01) ◽  
pp. 1650020 ◽  
Author(s):  
Jan Jindra ◽  
Torben Voetmann ◽  
Ralph A. Walkling
Keyword(s):  
Initial Public Offering ◽  
Cash Flows ◽  
Class Action ◽  
Litigation Risk ◽  
Chinese Firms ◽  
Regulatory Oversight ◽  
Reverse Merger ◽  
The Us ◽  
Prior Literature ◽  
Public Offering

We analyze the litigation risk of Chinese firms listed in the US. We find that firm-specific characteristics from prior literature studying US firms are not correlated with the litigation risk of US-listed Chinese firms. However, our findings indicate that the method of listing is the only reliable predictor of litigation risk — firms listing via reverse merger are significantly more likely to face lawsuits compared to firms listing via initial public offering (IPO). We find that Chinese reverse merger (CRMs) firms, relative to Chinese IPOs, have lower analyst following, similar post-listing stock performance, higher operating cash flows, smaller size, and lower cash holdings. We conclude that the litigation risk differential is consistent with the bonding hypothesis of [Stulz 1999, Globalization of Equity Markets and the Cost of Capital, Journal of Applied Corporate Finance 12, 8–25], wherein the higher litigation risk of CRMs is a reflection of increased but varying levels of monitoring, starting with the regulatory oversight at the pre-listing stage and a post-listing tradeoff between enforcement and monitoring by shareholders.

PCAOB inspections, auditor reputation, and Chinese reverse merger frauds

2013 ◽  
Vol 1 (3-4) ◽  
pp. 221-235 ◽  
Author(s):  
Ran Zhang ◽  
Si Chen ◽  
Jianfeng Wang
Keyword(s):  
Reverse Merger ◽  
Auditor Reputation
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