There are two recent papers on reverse mergers that may be of interest to my readers.
The first, by Jordan Seigel of Harvard and Yanbo Wang of Boston University, is the most thorough analysis of reverse mergers I have come across. They find there were 444 reverse mergers of Chinese companies into U.S. shells between 1996 and September of 2012. While companies in other countries have done reverse mergers with U.S. companies, only Canada (with 405 in the same per-iod) comes close to China.
Seigel and Wang posit that there are two reasons why a Chinese company might do a reverse merger with a U.S. company. First, it would be to access the sup-erior corporate law of the U.S. That is nuts. While Zhu Rongji chose to list some of the largest SOEs in the U.S. in order to use U.S. corporate governance pract-ices to help reform the companies, I would wager that not a single private bus-inessman in China would incorporate in the U.S. to give his shareholders greater protection. The second reason they advance is that companies do this to commit fraud. That might be possible in some cases, but I don’t think the majority of reverse mergers set out on a plan to commit fraud.