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China: Reverse-mergers in US not as toxic as previously thought, says study

By  |  September 18, 2013

A new study found that, contradictory to previous beliefs, Chinese reverse mergers within the US are not more harmful than domestic companies.

The study, entitled ”Shell Games: Are Chinese revere merger firms inherently toxic?”, found no evidence that such mergers were harmful within the US despite recent scrutiny from regulators following scandals of China-based firms.

Recent scandals involved China MediaExprss and China Agritech and lead to suspensions in trading.

But the study, performed by Charles M.C. Lee of Stanford University, Kevin K. Li from the University of Toronto and Ran Zhang of Peking University, found no evidence to support the idea that Chinese reverse mergers were more “toxic” than their domestic counterparts.

The study looked at revere mergers within the US between 2001 and 2010, during which China-based firms represented 85 percent of such mergers.

 

Full Content: CNBC

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