Ownership Structure and the Survival of Listed Firms: Evidence from Korean Reverse Mergers

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We examine the impact of ownership structure on the post-performance of Korean firms that go public as the result of a reverse merger. Although a reverse-merger announcement has positive cumulative abnormal returns (CARs), we find that 24.8% of reverse-merged firms become delisted because of poor post-performance, seemingly due to the agency problem. We also find that expected changes in management after a reverse merger positively affect the CARs of public target firms around the time of the reverse-merger announcement. However, the post-performance of reverse-merged firms is relatively poor compared to firms that undertake regular initial public offerings. Further, we find that ownership concentration alleviates poor performance following a reverse merger.
Publisher
WILEY-BLACKWELL
Issue Date
2015-06
Language
English
Article Type
Article
Keywords

CORPORATE GOVERNANCE; EMERGING MARKETS; FINANCIAL CRISIS; PERFORMANCE; COMPANIES

Citation

ASIA-PACIFIC JOURNAL OF FINANCIAL STUDIES, v.44, no.3, pp.387 - 420

ISSN
2041-9945
DOI
10.1111/ajfs.12094
URI
http://hdl.handle.net/10203/200088
Appears in Collection
RIMS Journal Papers
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