| Summary: | 碩士 === 長庚大學 === 工商管理學系 === 101 === The original purpose of an incorporation to reduce capital is to adjust its capital structure and improve the operating performance. Through this exercise, the company can maximize the return on equity.
In accordance with the laws and decrease of Taiwan government, there are three ways to reduce capital: to cover the loss of capital, to reduce capital by returning cash to shareholders, and to buy back the outstanding shares. The methodologies of this research adopt the Event Study, the Pair-Sample T Test and the Wilcoxon Test.
The research aims to analyze the short-term abnormal return and the influence on three-year long-tern operating performance before and after the practice of capital reductions of listed companies.
The empirical findings show that short-period positive announcement effect does exist, and significantly-positive average abnormal return and accumulated average abnormal return do take place, but they will not last long in the wake of capital reduction by the listed companies.
On the other hand, the nominal improvement on operating performance alone can neither enhance the utilization efficiency of long-period assets, nor can it substantially improve the operating performance of the listed companies that implement capital reduction.
In addition, when the cash-rich listed companies chose the return capital to shareholders, tangibly they might be spared the dividend payouts in short periods, that, however, can not guarantee to generate positive substitute effects as well as better business operations in the long run.
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