Research On The Follow-up Operating Performance Of A-share Backdoor Listed Companies

IPO is the main channel for Chinese company listing on the A-Share market.By this mean,more and more corporations got adequate cash capitals;and then huge influence speeded their development up.Nowadays the Approval-Based System applies the IPO of A-share in China.China Security Regulatory Commission(CSRC),which takes the charge of the authorizing of IPO,is pursuing a strict supervision policy to IPO.Therefore,being listing firms become scarce resources in the capital market.By the cause of jumping the queue of IPO,or by the cause of bypassing the approving of IPO,the actual controllers of some would-be-listing corporations choose a back-door way,Reverse Takeover(RTO),which becomes an alternative mechanism for IPO.With the appearance of RTO,a bit of problems harm the market,such as inside transactions,related-party transactions,and financial frauds.Appeals that RTOs should be under a more restrict supervision were taken by dozens of businessmen,officers,as well as scholars.Observing these issues,CSRC amended its regulations to restricting RTOs from 2011.Now we concern whether RTOs benefit the listing firms,whether the performances of RTO firms are inferior to those of IPO firms,and where the regulating to RTOs is effective.This paper will explore the key facts that impact the performance differences between RTO firms and IPO firms.We are most interested in RTO patterns.The first work of this paper is reviewing the literatures of RTOs,both domestic and abroad,and then summarized them.Seldom did the abroad studies focus on Chinese RTOs.Scarcely did Chinese studies pay adequate attentions on the operating performances after RTOs,most of which were aimed at share-price-based models.Thus,a study based on operating performances after RTOs in China A-Share market has rarely occurred,both home and abroad.After that,this paper defining RTO,and reviewing several theories about RTOs.Then we analyze the microeconomic effects which affects operating performance after RTOs,both positively and negatively.The most significant positive effect is synergy.Synergy has different types:operating synergy,management synergy,financial synergy,and intangible-assets synergy.Every pattern of RTO,including Vertical RTO,Horizontal RTO,and Diversification RTO.has its own mechanism to forming synergy.At the same time,RTOs also change the shell firms' competitiveness,including Bargaining Power of Suppliers,bargaining power of buyers,Threat of New Entrants,Threat of Substitutes,and rivalry,which could impact each other.Different RTO patterns have different paths to change the competitiveness.In a clean industry,horizontal RTOs and vertical RTOs could promote the competitiveness.However,not the effects of RTOs are always positive.Risk facts should not be ignored when RTO occurs.As long as the integration of resources after RTO is not successfully completed,the merger would do harm to the firm.Under the extreme circumstances,it would be an amplifier of risk.The empirical study to the samples of RTOs and IPOs listing between 2011 and 2015,finds(1)that as a whole,RTOs promoted the performances of shell companies,but not every RTO sample succeeds;(2)that compared to the IPO samples,as the control group,RTO samples have the disadvantages in the performance and financial robustness.A multivariate OLS discovers the causes.Vertical RTOs trend to close the gap,while horizontal RTOs make lower qualities.Industrial facts,asset size and controlling-power differences also impact the gap evidently.According to the results of the study,we give different strategies to the participators.The regulatory authority should improve its supervision to RTOs,such as system building,coverage enlargement,and censoring materialness.A flexible and dynamic system is helped to regulate the margin behaviors.When choosing the shell company,the quality and fitness should be considered as the most significant facts by the shell buyers.On the values after RTO should the investors focus,but not on RTO itself.