Empirical Research On Backdoor Listing

None of enterprises can develop or flourish without financing. In China, for many enterprises, especially private enterprises, the issue of financing is very serious. It is many entrepreneurs’dream to make their enterprises go public, building up the channels of direct financing. The regulators examine the IPO more strictly, and take longer time, thus backdoor listing becomes a suitable alternative way. Against the background, this paper studies the backdoor listing transaction in three aspects.Firstly, from the perspective of the pre-listing company, this paper studies the characteristics of the target shell companies. Select 25 feature variables from the various characteristics of the listed company, through a series of statistical and quantitative analysis method, finally get three significant features of the target shell company. The lower a listed company’s A-stock market value, EPS and growth rate of total asset, the more likely it would become a shell company.Secondly, from the perspective of shell company stock investor, this paper studies the abnormal return of the stock. By event study, compare the reactions of the shell company stock’s price after the two suspensions, which are suspensions of the first backdoor listing announcement and the CSRC examination, find that there is a strong positive reaction only after the first suspension. Continue to analyze the factors contributing to this abnormal return, ultimately prove that the longer the duration of the suspension and the lower the market value of the shell company, the more sharply the stock price rises after suspension.Thirdly, from the perspective of the government, this paper briefly studies the influence of the government actions to the backdoor listing transaction. The paper summarizes the laws and regulations relating to the backdoor listing transaction, explores the influence of the CSRC regulatory adjustments to the backdoor listing transaction, summarizes the state-owned background of both parties to the transaction and studies the participation of the SASAC, finally through the changes of the registered address, partly proves the local government’s urge to retain the shell company.According to the above analysis, this paper gives the corresponding proposals, including focusing the market value, EPS and the growth rate of the total assets when select a shell company, buying shell company stocks just after the first backdoor listing announcement suspension, for government restricting the public power and respecting the market rules.