The study examines a sample of 224 reverse takeovers (RTOs) that took
place in Europe between 1996 and 2015 along with a matched sample of
IPOs that occurred over the same period.
Particularly, our study
investigates whether RTOs provoke wealth effects comparable to IPOs.
Employing the classical event study methodology, we find that both
RTOs and IPOs exhibit comparable short
-
term and long
-
term price
performance. It is also shown t
hat RTO firms display better operating
performance than their control IPO counterparts in the post
-
going public
period. Equivalent survival rates for both groups are reported, as well. By
splitting the overall population into UK and non
-
UK sub
-
samples, it
seems that our results are not UK
-
driven but rather it is a pan
-
European
phenomenon. In sum, reverse takeovers should offer a viable alternative
to IPOs for certain types of firms.
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