 A reverse takeover as an exit strategy of venture capital: Korean evidenceSong, Kyojik “Roy”, Inho Kim and Young K. Chang Pacific-Basin Finance Journal, 2014, vol. 29, issue C, 182-198 Abstract: We investigate the characteristics of firms that choose between three different methods, IPOs, sellouts, or reverse takeovers, to obtain exchange listings using Korean data over the period of 2000–2010. We document that VC-backed firms tend to choose reverse takeovers rather than IPOs or sellouts to go public after controlling for other determinants. We also find that VC-backed reverse takeover firms have higher leverage, lower profitability, and higher information asymmetry than VC-backed IPO firms. The results suggest that venture capital uses a reverse takeover as an alternative exit method from their portfolio firms since reverse takeovers constitute a fast and low-cost going-public mechanism. We then find that reverse takeover firms perform worse than IPO firms over the long term regardless of whether they are VC-backed or not. Keywords: Venture capital; Initial public offering; Mergers and acquisitions; Sellout; Reverse takeover (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:29:y:2014:i:c:p:182-198 DOI: 10.1016/j.pacfin.2014.04.003 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.