Revisiting conceptual framework of governance & financial factors in reverse merger performance

Abstract

The performance reverse takeover firms or reverse merger firms have been studied in correlation to traditional initial public offering (IPO) performance. However, those studies have not been extensive enough to explain the contributing factors of the reverse merger performance. Some of the previous studies have compared the implication of corporate governance attributes and the implication of the financial conditions of the involving firms to the reverse merger firm performance. However, there are more areas to be assessed in the perspective of corporate governance, including the variety of ownership structure and its effect on the risk-taking behavior and reputation. This study proposes a new conceptual model on how corporate governance and financial characteristics influence the reverse merger performance, constructed from the literature review. The conception of the reverse merger characteristics and how they are associated with the firm performance is expected to support investor in their investment decision.