The study on how the declaration of capital reduction and private placement affect stock price

• Main Authors: Chun-Ting Shih, 施俊廷
• Other Authors: Hsin-Hong Kang
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/84140402716808394690

碩士 === 國立成功大學 === 高階管理碩士在職專班 === 94 === For the past few years, Taiwan Public Listed Companies executed numerous Capital Reduction and Private Placement in the stock market. From the optimistic side, we believe that corporations still have value to survive. However, from the pessimistic side, executing Capital Reduction and Private Placement without promising to improve businesses operations will cause very high risk for investors. This research mainly discusses how declaration of Capital Reduction affects stock price. It is quite common for companies to have Capital Reduction and Private Placement at the same time and hence this research will also discuss the effect on stock price. This research uses Event Study to view the impact, caused by Capital Reduction and Private Placement, on capital market. Furthermore, it also uses Time Series Analysis to analyze how the first declaration for Capital Reduction and Private Placement stock affects stock price fluctuation. Samples are drawn from Taiwan public listed companies, which executed Capital Reduction or Private Placement form January 1st ,2002 to December 31, 2005. Conclusion for this research: 1. The impact on stock price, caused by declaration of Capital Reduction, is significantly adverse. Stock price before the declaration date is tremendously different from that after declaration data. The research indicates that average stock price before declaration data is higher than that after declaration data. This demonstrates that capital market can response to important information on a timely manner, as suggested by the research results. 2. With respect to impact on stock price, caused by declaration of Private Placement, as shown from research samples, there is no significant difference between stock prices before and after declaration date. Furthermore, it also demonstrates that stock price and time frame do not appear to have linear relation. 3. The impact and trend on stock price, caused by declaration of Capital Reduction and Private Placement, is similar to point 2 above.