Research on the New Regulation of Reverse Mergers in Taiwan through Historical Experience
Date Issued
2014
Date
2014
Author(s)
Chien, Chi-Ting
Abstract
This paper discusses reverse mergers of Taiwan market. In 2013, the “Top Pot Bakery” event evoked market’s concern about reverse mergers. Thus, the same year, Taiwan Stock Exchange amended the Securities Exchange Act to raise the requirements for backdoor listing. New rule makes hard to reverse mergers in Taiwan market now. The rule defined the reverse mergers by changing in board and operating range. This study found that it needs cost to investigate and sometimes it has time error. As a result, we suggest the company which did the reverse mergers should submit the financial and operational planning book. This paper verified the new reverse mergers rule by the sample from 2004 to 2010, and found the EBT to contributed capital can distinguish the company’s operations is good or bad. But the threshold does not consider earnings management and window dressing. This study gives examples of the reverse merger firms who didn’t meet the standards but still perform well and those who did meet the standards but had run into financial distress. So the rule can’t eradicate all the stock sensationalization. This study found the shell company’s quality would influence the company’s operating performance after reverse mergers. Because of liquidation, minority interest, and the debt of shell companies, this study indicates that the good company who want to list by backdoor would make a deal with good shell company. If the company finds the shell company with financial distress or bad criminal record doing the reverse mergers, the authorities and investors need to be vigilant to avoid the scandal to reappear.
Subjects
借殼上市
反向併購
殼公司品質
個案分析
SDGs
Type
thesis
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