Empirical Analysis On The Performance Of Backdoor Listing

Merger and acquisition is an eternal theme of the capital market, and an important way to optimize the allocation of resources. Backdoor listing, an important way of M&A, with advantages such as low transaction costs and easy entrance to the stock market, has aroused widespread concern. However, as many backdoor listings go with inside trading scandals, the backdoor listing has been regarded as the speculation of ST stock. Can backdoor listing increase the market value of listed companies? Whether backdoor listing has got further specification in recent years? These questions are all worthy of our in-deep research.First, researches on M&A and backdoor listing are drawn to define concepts about backdoor listing, and make a clear scope of this study. Then, basic theories of M&A and backdoor listing are reviewed and analyzed. After analysis on economic and legal background of backdoor listing, features of both participants of backdoor listing are analyzed by descriptive statistics and logistic regression. Then, taking data of49Chinese listed companies in Shanghai and Shenzhen A-share market from2007to2010as samples, an empirical study of the performance of backdoor listing is made by event study. It turns out that backdoor listing has an impact on both average abnormal returns (AAR) and cumulative average abnormal returns (CAAR) in the short term. That is to say, backdoor listing improves the market value of listed companies in the short term. However, there is also an early response in the market, which may be caused by insider trading and the speculation in the market. Sub-annual analysis of CAAR shows that it declines year by year, which means backdoor listing is getting better regulation. Comparing CAAR of cross-industry backdoor listing companies and that of non-cross-industry backdoor listing companies, the former is significantly higher. After that, the author tested factors influencing the performance of backdoor listing by multiple regression analysis. The results show that both SIZE and ROE have a significant negative correlation with CAR, while there is no obvious correlation between CAR and TOBIN-Q, CASH, INDUSRY or PAM. Finally, the author concludes the study, makes recommendations for improvements, and points out prospects the further research as well as limitations of this thesis.