The determinants and survival of reverse mergers versus initial public offerings in the Philippines

• Main Authors: Ramchandani, Krishna H., Santiago, Dianne S., Villacampa, Samantha Joy M., Xu, Jennefer S.
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Going public (Securities) > Philippines; Consolidation and merger of corporations > Philippines; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/7866
• Institution: De La Salle University

Over the past several years, the trend of companies going public has been increasing especially that of those undergoing reverse mergers. However, are reverse mergers truly the best way for companies to go public? This research studies the determinants of firms who undergo a reverse merger or IPO, and the effect of reverse merger on the financial performance and survivability of the firm. The researchers used the logit model specifically to establish the determinants of reverse mergers, and the survival model to determine the probability of delisting a company that underwent either reverse merger or IPO. It used the entire population of 60 publicly-listed companies in the Philippines which are subdivided into 40 publicly listed companies that have undergone IPO and 20 which opted to do a reverse merger. Results show that age, liquidity and market conditions affect the decision to undergo either of the 2 methods. It was also noted that firms that undergo IPO are listed longer compared to firms that have undergone reverse mergers. As such, it is noted that it is better to undergo an IPO for firms in the Philippines.