Market Liquidity, First-mover Advantages, and the Design of Reverse Merger Regulation
Date Issued
2014
Date
2014
Author(s)
Tsai, Hsin-Ying
Abstract
This thesis establishes a theoretical model to investigate welfare issues related to reverse mergers, which are a type of mergers used by private firms to become publicly traded without resorting to the initial public offering (IPO) process. It proposes that reverse mergers provide a way for private firms to get listed rapidly and gain first-mover advantages in the product markets, but the managers of poor-quality firms may use reverse mergers to get listed and exploit uninformed investors through insider trading. This thesis finds that moving the reverse merger stocks to a stock market with lower market liquidity may be the best choice in terms of social welfare. This arrangement effectively limits the insider trading gains of the poor-quality firms’ managers, thus depresses their incentive to undertake reverse mergers. At the same time, it still allows firms that have good market opportunities but cannot satisfy the IPO standard to get listed through reverse mergers.
Subjects
借殼上市
理論模型
法規探討
市場先機
內線交易
Type
thesis
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ntu-103-R01723018-1.pdf
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