| Summary: | 碩士 === 銘傳大學 === 風險管理與保險學系碩士班 === 94 === July 22nd, 2005, Taishin Holdings (“Taishin”) won the Chang Hwa Bank (“CHB”) bidding 1.4 billion Series “B” Mandatory Convertible Preferred Shares (“MCPS”) at a total price of NT$ 36.568 billion. To study the case, this paper utilizes the event study method to test whether Taishin’s decision supports the hubris hypothesis or the synergy hypothesis. Moreover, this paper discusses whether Taishin suffers the winner’s curse because of paying too much in the competitive bidding. Finally, this paper discusses the perspectives on future developments by analyzing financial performance. The results are as follows:
1.Taishin’s market value reduced because of higher bid for MCPS. This result supported the hubris hypothesis.
2.Comparing with other failure bidders, Taishin suffered the winner’s curse in the competitive bidding.
3.With capital infusion of NT$ 36.568 billion, the profitability and shareholders’ wealth of CHB increased.
4.After consolidating with CHB, Taishin will have over NT$ 2.3 trillion in total asset. Such a scale will reach number two in the Taiwan financial holdings rankings.
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