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Korean Journal of Financial Studies 2013;42(1):193-226.
Published online February 28, 2013.
The Survival of Merged Firms in Reverse Mergers
Hyo Suk Kang, Hae Pil Ryu, Jin Hwon Lee
역인수합병시 합병가치 및 대주주지분율 변화에 따른 기업의 생존율
강효석, 류해필, 이진훤
This paper analyzes whether the overvaluation of a firm in a reverse merger and the subsequent change in the percentage of shares held by a majority shareholder have any impact on the survival rate of the merged firm. Based on an analysis of a sample of 178 reverse mergers occurring between 2000 and 2008, we have the following findings. First, the profitability, debt ratio, and size of the listed and unlisted companies involved in reverse mergers have significant effects on the survival rate of the merged firms. Second, the survival rate of the merged firms is low when the values of the private firms were overestimated during the merger negotiations and the percentage of shares held by the majority shareholder decreased after a merger. Third, companies with a higher exercise ratio of appraisal rights-a good indicator of minority shareholders` response to a reverse merger-show a lower survival rate. This study offers several valuable contributions to reverse merger analyses. It factors in financial characteristics of unlisted companies as well as the minority shareholders` appraisal rights of listed companies in analyzing the survival rate of merged firms. It also investigates whether the unlisted firms were over-evaluated during the merger process and how the changes in the major shareholder`s equity holdings after merger influenced the long-term performance and survival rate. We expect that the findings of this study will serve as guidance for investors and authorities concerned with reverse mergers.
Key Words: 생존분석,역인수합병,우회상장,주식매수청구권,합병가치평가,Appraisal Rights,Backdoor Listing,Merger Valuation,Reverse Merger,Survival Analysis

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