A Comparison of Penny Stock Initial Public Offerings and Reverse Mergers as Alternative Mechanisms to Going Public

Floros, Ioannis V.; Shastri, Kuldeep

doi:10.2139/ssrn.1460979

Cited by 23 publications

(33 citation statements)

References 28 publications

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“…They show that these companies outperform matched IPO companies in the short run, but exhibit comparable performance three years following the going public decision. Floros and Shastri (2010) compare and contrast the decision to go public using RMs versus penny stock IPOs (PSIPOs). They hypothesize that RM companies are highly information asymmetric, since they do not conduct a public offering at the consummation of the deal.…”

Section: Literature Reviewmentioning

confidence: 99%

“…In summary, with the exception of Floros and Shastri (2010), prior academic work on RMs has been focused on transactions between two regularly operating companies creating synergies after the consummation of the RM deal. Most existing work does not focus on shell company RMs, and no existing study focuses on shell company performance.…”

Section: Literature Reviewmentioning

confidence: 99%

“…With this analysis we seek to associate the liquidity results presented above with any trading activity by insiders, 18 The letter of intent date was clearly stated either in press releases preceding the RM deal or in Item 1 of the 8-K document submitted to the SEC within four business days after the consummation of the RM deal. 19 Floros and Shastri (2010) identify 104 out of 892 RMs that were withdrawn over the period January 1979 to December 2005. Common reasons for withdrawal as reported by executives were: disagreement on the premium to be paid, current economic conditions, the merger process taking too long, and a superior alternate offer.…”

Section: Ownershipmentioning

confidence: 99%

“…Essentially, the owners and managers of the former private company become the owners and managers of the combined firm. 5 See Feldman (2006) and Floros and Shastri (2010) for more information on RM deal costs. 6 According to DealFlow Media's May, 2009 Reverse Merger Report.…”

Section: Introductionmentioning

confidence: 99%

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