Summary: | 碩士 === 朝陽科技大學 === 財務金融系碩士班 === 92 === In viewing the very limited number of studies addressing to the estimation of financial distress costs, the present study makes use of stock prices for TAIEX-listed companies of which a financial distress takes place as reported in the press during the period from 1998 to 2001 to estimate financial distress costs. Besides, in Taiwan, the Securities and Futures Commission, Ministry of Finance is empowered to decide the mode of transaction including “cash transaction only”, “suspended trading”, and “delisting” which allows us to estimate further financial distress costs under different categories.
Concerning the first research issue, on the basis of average stock prices in advent of financial distress, the present study finds that the financially distressed firms during the period from reporting in the press to the first-ever date in change of transaction mode have registered an average 62.41% reduction in shareholder wealth. Of which, needless to say, the magnitude of 62.41% has reached statistical significance. Concerning the second research issue, the major findings are as follows: First, the present study finds that there are no systematic differences in terms of the magnitude of reduction in shareholder wealth between “the cash transaction only” and “the suspended trading” groups. Second, the present study finds that the reduction in shareholder wealth relatively speaking is much greater for the delisting group than that of the suspended trading group.
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