The Influences on Long-run Performance of Capital Reduction by Returning Cash

• Main Authors: Yu-Fen Nien, 粘瑜芬
• Other Authors: Chun-Ho Chen
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/09261692915105384226

碩士 === 國立中興大學 === 會計學研究所 === 99 === Capital reduction by returning cash is one of new methods of capital reduction. Corporation can eliminate too much free cash flows and solve the problem that inflates too much in the equity capital. Deducting capital can improve the financial structure of the corporation. Hence, capital reduction by returning cash can improve the long-run performance of the corporation. This paper is based on listed corporations which announced to deduct their capital from 2002 to 2009. By utilizing univariate analysis, multiple regression analysis, and Fama–French three-factor model to investigate the effect of long-run performance of the corporation. The empirical results indicate that the corporation which conducts capital reduction by returning cash can promote follow-up three-year operating performance but there is not significant influence in the first year after capital reduction, and there is negative influence in long-run stock price. That demonstrate corporation can utilize capital reduction by returning cash to reduce free cash flows and capital. If keeping the same earning level of the company, it did promote the long-run operating performance, but the effect is not conspicuous. The long-run stock price performance has negative effect, because the corporation signals for lower grow opportunity.