The Effects of Capital Reduction: Evidence from Taiwan Listed Companies

• Main Author: 林淑惠
• Other Authors: 吳明政
• Format: Others
• Language: zh-TW
• Published: 2010
• Online Access: http://ndltd.ncl.edu.tw/handle/51718169917069058184

碩士 === 國立彰化師範大學 === 商業教育學系 === 98 === According to statistics from Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan, Taiwan, over the past few years, has more listed companies and money devoted to cash capital reduction rather than cash capital increase, representing the idea of capital reduction has been widely accepted and used by general enterprises, meanwhile, signaling a mature enterprise when there is no significant capital expenditure plan, will take capital reduction into consideration to alleviate enormous capital stock and idle capital. Ministry of Economic Affairs expressed that firms are allowed to return investment amount to original stockholders with properties except cash and the Legislative Yuan further relaxed the regulation on capital reduction of cash return. All these evidently unveil the necessity and importance of capital reduction. First, regardless of bull or bear market, this study, based on Company Law, explores legal capital reduction-caused abnormal return on stock price, including capital reduction for making up loss and cash capital reduction. Second, based on Securities and Exchange Act, the researcher explores abnormal return on stock price resulting from stock repurchase, including initial and non-initial treasury stock capital reduction. Finally, this paper differentiates abnormal return on stock price under bull and bear market, resulting from capital reduction for making up loss and cash capital reduction. To summarize above analysis this study raise conclusion concerning the effect of capital reduction on stock price from listed companies, as well as offer implications and suggestions for government agencies, enterprises, and investors.