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Title: Investigating the valuation effects of reverse takeovers: evidence from Europe
Authors: Dasilas, Apostolos
Grose, Chris
Talias, Michael A.
metadata.dc.contributor.other: Grose, Chris
Talias, Michael A.
Type: Article
Subjects: FRASCATI::Social sciences::Economics and Business::Finance
Issue Date: 2017
Source: Review of Quantitative Finance and Accounting
Volume: 49
Issue: 4
First Page: 973
Last Page: 1004
Abstract: This study examines a European sample of 222 private firms that opted for going public through a reverse takeover transaction during the period 1992–2011. In particular, our study investigates whether reverse takeovers announcements are value-increasing transactions, especially in countries that follow strong governance structures. Moreover, the post-reverse takeover stock price and operating performance is also at the epicenter of the current study. Employing the classical event study methodology, we document significant wealth gains for the shareholders of public firms involved in reverse takeovers. The market reaction is stronger when stricter corporate governance structures prevail in the countries where public firms trade. However, the short-term gains seem to revert to substantial losses over the long-term lending support to the overreaction phenomenon. We further detect negligible improvement in the post-reverse takeover financial performance of the new entity raising further concerns over the efficacy of such transactions.
ISSN: 0924-865X
Other Identifiers: 10.1007/s11156-016-0614-9
Appears in Collections:Department of Applied Informatics

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