Are Good Companies Good Investments?

• Main Authors: Liu, Te-Yi, 劉德一
• Other Authors: Hsu, Chisheng
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/09909637305447370657

碩士 === 東海大學 === 管理碩士在職專班 === 100 === With a view to verify if a so-called good company is good only in terms of price rather than investment, this thesis takes as the sample Taiwan enterprises out of 200 Asian trademark companies the Wall Street Journal, or WSJ, announced during 1997 to 2010. The sampled Taiwan companies bought on the first day of the next month after WSJ announced the list constitute the investment portfolio, which is held until the next year when new list of trademark enterprises is pronounced. In the meantime, this study re-shuffles the portfolio every year into 14 different investment portfolios, whose average monthly return are being computed until January 2011. The empirical results show that the sampled corporations tend to be large, highly-profitable, and mostly mature companies. As the analysis of buy-and-hold return shows, the annual buy-and-hold return rate of the sampled companies collects only 3%, whereas that of the market investment portfolio soars to 18%; obviously, the so-called good companies are more those with good stock prices than good investment targets. Results from CAPM, Fama-French three-factor, and Fama-French-Carhart four-factor models also reveal that sampled enterprises suffer significant negative abnormal return, proving again that good companies are good only in terms of stock prices rather than investment potentials.