Abstract

http://ssrn.com/abstract=1356324
 
 

References (60)



 
 

Citations (7)



 


 



The Value of Capital Market Regulation: IPOs versus Reverse Mergers


Cécile Carpentier


Laval University; Center for Interuniversity Research and Analysis on Organization (CIRANO); University of Lille II - European Center for Corporate Control Studies

Douglas J. Cumming


York University - Schulich School of Business

Jean-Marc Suret


Laval University; Center for Interuniversity Research and Analysis on Organization (CIRANO); European Center for Corporate Control Studies

November 25, 2010


Abstract:     
We analyze the economic consequences of disclosure and regulation within a context of significant information asymmetry and lenient regulation. In Canada, firms can enter the stock market at a pre-revenue stage by fulfilling each of the requirements of an initial public offerings or using reverse mergers. This backdoor listing method implies a smoother oversight by the securities commission and a shorter process based on private placements. Controlling for several dimensions, including self-selection, we find that the choice of the listing method and regulation strictness significantly influence the value and long-run performance of newly listed firms. These results are consistent with theories suggesting that a commitment by a firm to a stricter regulatory oversight lowers the information asymmetry component of the cost of capital, reduces the heterogeneity of expectations and mispricing.

Number of Pages in PDF File: 49

Keywords: Disclosure, Securities Regulation, Initial Public Offerings, Reverse Mergers, Listing Standards

JEL Classification: G24, G32, G14, G15

working papers series


Download This Paper

Date posted: March 11, 2009 ; Last revised: December 1, 2010

Suggested Citation

Carpentier, Cécile and Cumming, Douglas J. and Suret, Jean-Marc, The Value of Capital Market Regulation: IPOs versus Reverse Mergers (November 25, 2010). Available at SSRN: http://ssrn.com/abstract=1356324 or http://dx.doi.org/10.2139/ssrn.1356324

Contact Information

Cécile Carpentier
Laval University ( email )
Pavilion Palasis Prince
Quebec, Quebec G1V 0A6
Canada
Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )
2020 rue University, 25th floor
Montreal, Quebec H3C 3J7
Canada
University of Lille II - European Center for Corporate Control Studies ( email )
2 rue de Mulhouse
Lille, 59800
France
Douglas J. Cumming
York University - Schulich School of Business ( email )
4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
HOME PAGE: http://www.venturecapitalprivateequitycontracting.com/
Jean-Marc Suret (Contact Author)
Laval University ( email )
Accounting School
Quebec, P.Q. G1K 7P4
Canada
418-656-7134 (Phone)
418-656-7746 (Fax)
Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )
2020 rue University, 25th Floor
Montreal, Quebec H3C 3J7
Canada
European Center for Corporate Control Studies ( email )
2 rue de Mulhouse
Lille, 59800
France
Feedback to SSRN


Paper statistics
Abstract Views: 2,200
Downloads: 732
Download Rank: 11,882
References:  60
Citations:  7
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.531 seconds