Long-run performance of backdoor-listed firms

We examine the long-run performance of a sample of firms going public through backdoor listing on the ASX during the 1994−2013 period. When benchmarked with a control sample of IPOs, backdoor-listed firms underperformed in the aftermarket. Over the three years after listing, they raised less equity capital and were less profitable and more financially distressed than their IPO counterparts. They also performed poorly in terms of buy-and-hold returns against the matched IPO firms and broad-based market indices. Our results tend to corroborate findings in the US and Canada but are inconsistent with their assertion that lax regulatory oversight is the major cause of underperformance since Australian backdoor listings have to comply with essentially the same listing requirements as IPOs.