Smes In China Otcbb Reverse Takeovers Of Listed Performance Empirical Research

The financing difficulties associated with medium and small sized enterprises are not unique to China but are world-wide issues. The local medium and small sized enterprises have been dramatically developed since the reform and opening-up policy 30 years before. Under the background of the economic globalization, the financing issues incurred by the medium and small sized enterprises are becoming increasingly important along with the expansion of the market and company scale. In order to solve the financing difficulties, the local medium and small sized enterprises have to blaze various ways, while one of the popular ways is to go public on the NASDAQ OTCBB market through reverse takeover (RTO) and then finance through upgrading to main board or private placement. RTO refers to a specific corporate event where a public shell registrant (the defacto acquired party) issues a high proportion of shares to acquire a private company's (the defacto acquiring party) assets and businesses, finally the shareholders of the private company control the majority interests of the registrant and go public indirectly.The thesis adopts empirical research methodology and studies on the Chinese medium and small sized enterprises' performance after going public on OTCBB through RTO. We conducted statistics on local public medium and small sized enterprises as on Jun 30^th, 2008 based on the public information and data and assessed the RTO performance by financial indicator and investor return analysis. The thesis utilizes the financial indicator analysis as the fundamental tool and overcomes the regular shortfalls in other thesis with insufficient supporting data.Heralded by the U.S. sub-prime loan crisis, the 2008 global financial crumple has strongly struck almost all the stock markets on the world, in which NASDAQ index has dropped from 2,367.52 (as on the end of Aug 2008) to 1,322.85 (as on the beginning of Mar 2009) with a 44.1% recession. The Chinese medium and small sized enterprises stock prices have also been significantly impacted. Under the current rigorous international financial situation, it is more realistic to analyze the RTO performance for local medium and small sized enterprises.Through the empirical research, we can get an overview that although in recent 10 years there are some successful financing precedents through RTO, in most cases the registrants' performance after RTO are not satisfactory therefore cannot attract the investors. In the long run, the Chinese medium and small sized enterprises shall make use of the multifarious OTCBB financing instruments based on a thorough understanding of the OTCBB market, which ties closely to the companies' operating capabilities and the government support.