Suchergebnisse

Purpose
The purpose of this study is to examine how the liability of foreignness (LOF), choice of incorporation and an institutional change independently and jointly affect a reverse merger (RM) firm's capital-raising performance.


Design/methodology/approach
The study draws on the data of shell reverse merger transactions in the USA from 2007 to 2016.


Findings
This paper finds that LOF and the choice of incorporation as a signal have a significant effect on RM firms' capital-raising performance. In addition, this study finds that the effectiveness of the signaling can be affected by LOF. Finally, this paper finds that an institutional change that lowers the entry barrier to the initial public offering (which is a superior alternate to an RM) affects the impacts of LOF and signaling on RM firms' capital-raising performance.


Originality/value
The study contributes to the international business literature by examining the RM (which has been an under-researched topic in the literature) by drawing on the LOF framework. The study finds that LOF and the choice of state for incorporation affect RM firms' capital-raising performance; moreover, these relationships are affected by an institutional change.