The wealth effects of Australian Reverse Takeovers

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Semantic enrichment/homogenization by EKT

2015 (EN)
The wealth effects of Australian Reverse Takeovers (EN)

Makantasi, Maria Irene Jr (EN)

School of Economics, Business Administration and Legal Studies, MSc in Banking and Finance (EL)
Archontakis, Fragiskos Jr (EN)
Grose, Christos Jr (EN)
Dasilas, Apostolos Jr (EN)

This study examines a sample of 47 private firms in Australia and New Zealand that chose to go public through a reverse takeover (RTs) transaction. The proposed dissertation aims at exploring the wealth effects of such transactions in Australia and New Zealand which have recently experienced an unprecedented wave of RTs. Especially, the current study is going to examine the main reasons of going public via a reverse takeover in the Australian and New Zealand’s market for 47 reverse takeovers that took place between 1993 and 2014. Another task of the study is to unveil the main characteristics of reverse takeovers, the benefits and costs for a firm going public this way and the post-merger operating performance of the new entity. Reverse takeover is a process that allows a private company to go public by acquiring a public one. When the transaction is completed, the new merged company usually operates under the management of the private-target company. Furthermore, the public company undertakes the target’s name in order to operate as a new entity after the merger. The public company is most of the times a poor performer or a non-operating shell which chooses to undertake a RT process in order to improve its future performance. It has been observed that there are significant gains for the shareholders during a short term period around the event, but in the long run, the post-merger performance seems weak. Though the RT process is considered to be a cheaper and less time consuming method compared with an IPO, it appears to be risky, if one takes into consideration the long-term performance of the merged entity. After analyzing our sample we concluded that the announcement of an RT generates abnormal returns which seem to increase the wealth of the shareholders. The investors’ reaction is more slow when compared to the results of other studies but this can be due to the information asymmetry that characterizes the companies we examine. The post-merger performance analysis gave also good results, showing that even though the firms do grow in size after the merger, they do not grow in financial matters at the desired levels. Some of them do not survive as well. (EN)

masterThesis

Corporations--New Zealand (EN)
Corporations--Finance (EN)
Corporations--Australia (EN)

Διεθνές Πανεπιστήμιο της Ελλάδος (EL)
International Hellenic University (EN)

2015-12-18


International Hellenic University, MSc in Banking and Finance (EN)



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