| Summary: | 碩士 === 國立成功大學 === 財務金融研究所 === 106 === 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.
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