The Research On Motivation Of And Performance Of RTO

RTO is a new way of corporate mergers and acquisitions. Non-listed companies can control listed companies through the acquisition of a shell company, listed companies reverse purchase high-quality assets of non-listed companies in order to achieve the aim of listing. Because of the high standard of IPO and many privileges of listed company, the reverse acquisition of listed enterprises becomes the preferred shortcut of listing and financing. Under this background, this paper study non-listed enterprises’internal and external motivation of reverse takeover of listed enterprises, and RTO’s short-term and long-term impact of business’s performance.This paper firstly sorts out the basic theories of mergers and acquisitions and reverse takeovers. Secondly, we summarize RTO’s motivation and companies’performance at home and abroad. Besides, we also combine with China’s specific national conditions to describe and analyze the enterprises’motivation and status after RTO. So, we select77sample enterprises at years of2007to2011to study reverse acquisition’s short-term impact on the corporate performance by event study and long-term impact by accounting indicator approach.This paper argues that the financing demand of the enterprise is the fundamental motivation and lead to the reverse acquisition. Generally, no matter short-term or long-term impacts, after reverse acquisition, sample enterprises’performance level is higher than before the RTO. So, enterprise’s RTO in our country is a feasible and effective.