Research On Performance Of Securities Companies Based On Reverse Merger Mode

Chinese securities companies were born in 1980s, during the thirty years of development, they have played an important role for the national economy development and the reform of economic system.Securities companies which are the main intermediary in Chinese securities market,their level of development and improvement relate with the development and growth of Chinese securities market.Especially, since April,2006, the stock market appeared from cattle to bear obviously. This trend was expected to be continued for the comprehensive analysis of policy, fundamentals, capital, technical. Market prices improvement was good for securities companies keeping overall high level of performance levels. If companies listed in the market in the 2007-2008, they will obtain higher pricing, and raise more funds. Opportunities of listing for securities companies are maturing, and there are two listing ways:IPO or reverse acquisition. But by the end of 2005, Chinese securities industry have been entire trade deficit for four consecutive years, most companies are difficult to achieve the requirement of IPO "Successive three years of profit" by 2007, and even achieved this requirement, they were also experienced a multiprogramming before CSRC audit and permit. Therefore, the majority of eligible securities which want to realize list through IPO cannot list until 2009. Due to audit system of distribution system will exit for a long time, if securities companies catch the future list peak, the company's list trough the audit will be more slow, and this will affect the development of companies. In this context, time-consuming and short reverse merger will undoubtedly become the" shortcuts" for the most companies which want to list, There are a total of 17 listed securities companies in the stock market so far, in which are 8 list securities companies through reverse mergers, these securities companies are Guangfa Securities, Changjiang Securities, Guoyuan Securities, Northeast Securities, Guojing Securities, Haitong Securities, Southwest Securities, Guohai Securities.This paper first explain all types literature of reverse merger about securities companies, and then introduced a variety of theoretical basis of the enterprise merger and acquisition. On this foundation, it explained the related concept of reverse merger. Then, the paper analyses two choosed paths of the Chinese listed securities companies, including comparing the respective advantages and disadvantages of two paths, and then explain the reason of why securities companies go to list through reverse acquisition. Next, the paper classifies reverse merger models of the existing 8 listed securities companies, analyses their advantages and disadvantages, and introduces typical examples for each category of reverse merger models. Finally, this paper adopts two kinds of analysis for the reverse merger performance, using the relative ratio method and factor analysis method, hoping giving a objective assessment on performance of securities companies after reverse merger through different empirical methods. The paper analyses the performance changes after adopting different reverse acquisition modes, and causes, it draws the conclusion that different reverse acquisition modes have different effects on the performance of securities companies after listed, securities companies should consider integrately when chose the reverse merger model.