The effect of financial holding company on the stockholder''s wealth

• Main Authors: Yi-Rung Wang, 王藝蓉
• Other Authors: Chun-nan Chen
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/89368925279593058224

碩士 === 國立成功大學 === 財務金融研究所 === 91 === As a result of deregulation by banks and securities firms, the U.S. Congress passed the Financial Service Modernization Act of 1999, which touted as the biggest change in the regulation of financial institutions in nearly 70 years. The bill not only repealed the Glass-Steagall barriers between commercial banking and investment banking, but also allowed for the creation of a “financial services holding company” that could engage in certain activities, including insurance and securities underwriting and agency activities, merchant banking, and insurance company portfolio investment activities. In 2001, motivated by this Act, the Taiwan Government also opened the door for the creation of full-service financial institutions similar to these existed in the U.S.. The purpose of this study is to examine the effects of establishing a financial services holding company on the stockholder’s wealth in the Taiwan as well as the U.S. case. The study has event study methodology which based on OLS regression and GARCH（1,1）, will be needed to test for significant abnormal return, cumulated abnormal return surrounding the date of public announcement (or establishment) of a financial services holding company. Due to the insufficient sample size of Taiwan and American, I will develop a new methodology based on the Quasi-experiment and repeated measures ANOVA, to obtain valid test statistics. Empirical results indicate that : （1）Those joined the financial holding companies have significantly abnormal return at the Act amendment date, announcement date, application date, and permission date, but not at the listing date. （2）Compared with stockholder of non-financial holding companies, stockholders of financial holding companies have significant increase in wealth in the short term.（3）After the Act amendment date, announcement date, application date, and permission date, the increase in stockholders’ wealth in financial holding companies seems lasting. Consistent with the Taiwan case, stockholders of the U.S. acquiring financial holding companies have insignificant increase in wealth at the announcement date.