Long Term Stock Performance for Twice Repurchases in Taiwan

• Main Authors: Hui-Wen Chang, 張惠雯
• Other Authors: Ying - Yung Lin
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/47827518404718502133

碩士 === 淡江大學 === 財務金融學系碩士在職專班 === 96 === The main purpose of this thesis is to examine the long-term performance of the stock of firms that announcement open market repurchases for twice during the period from Jan. 2001 to Dec. 2006 in Taiwan. I use market model and simple regression model to analysis and examine the long-term performance of twice repurchases. Besides, I divide the sample into three groups：The whole industries, the electronic and non-electronic industries. Furthermore, I use dependent variable – cumulative abnormal return ( CAR ) and independent variables – announced repurchase purposes、repurchase ratio、turnover、capital size、repurchase stock share ratio and price to book value by simple regression model to examine whether any positive effects could sustain in the long run. This study predicts that there are positive performance and long-term abnormal performance after announcing open market repurchases at the end of transaction date for one and three years. In addition, different repurchase purposes also influence the long-term performance of stock repurchases. Firms are required to complete a repurchase within two months of the announcement in Taiwan. Moreover, firms are required to announce all open repurchases and to report the number of shares actually repurchased at the end of the repurchase period. These unique data enable us to better understand what factors drive repurchases. Besides, this study also predicts that completion rates are higher in case that under-valuation may be a primary motive for the repurchase. Furthermore, this study predicts that electronic industry’s completion rate is higher than other industries. When price rises, managers tend to buy fewer shares whereas a drop in price triggers an increase for repurchase activities. This sensitivity to stock price suggests that under-valuation is an important consideration for buying back.