Chinese Companies In The United States Reverse Merger Risk Early Warning

Reverse Merger as a shortcutlisted on the Unite State that has been explored by manyChinese companies.To solve the financing problem,set up brand image and build new globalization competitive for Chinese enterprises,this shortcut has been found.Some enterprises use the method to laid a reliable foundation for the enterprise's long-term development,but there're also a significant part of the enterprises have been delisted in the process of reverse merger due to information disclosure problems and short selling.Chinese companies faced with many risks from the U.S.capital market,However,the capital market development of China is still imperfect today.Meanwhile,reverse merger is still a useful way that promoting the development of Chinese companies and the risk analysis will help the companies in reverse merger avoid risk effectively,and make economic growth steadily.Against the case analysis method on Reverse Merger Process of Chinese enterprises,this paper has discussed on the reason of delisting and summarized the external risks from delisting.Meanwhile,the companies that listed in United State capital market for reverse merger from 2008 to 2010 have been studied as the research object in building the F Score Model.In this essay,the author analysis 7 delisted companies to 7 listed companies through F Score Model,According the financial indicators test results to judging the usability of F Score Model,testing 2 delisted companies and 18 listed companies from 2011 to 2014 with F Score Model,And the result show that the judgement about delist companies are correct,while the probability of correct judgement about listed companies is 85.74%.Thus,the F Score Model is suitable for China reverse merger companies to earning their financial indicators,And it's helpful to the companies to judge the factors which lead the companies to delist,then resist the risk effectively.The main findings and conclusions are as follows:(1)Information disclosure is the main reason that many companies has been delisted,the act that the companies exaggerate the profitability,provide false financial statements which violate the U.S.capital market information disclosure relevant requirement,the Chinese companies need to enhance the authenticity of information disclosure;(2)There are a certain difference between domestic and international in financial system,but the difference is not the decisive factors which lead the failures of Chinese companies;(3)There is trend that the short sales going short Chinese companies viciously,but the Chinese companies should strengthen the construction of their integrity.(4)The F Score Model predict the financial risks effectively,And the companies could use F Score Model to construct the prediction of financial distress.