A Study on Factors Affecting Control Premium

• Main Authors: I-Ping Chang, 張儀蘋
• Other Authors: Taychang Wang
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/55650019219741776646

碩士 === 國立臺灣大學 === 會計學研究所 === 104 === In the highly competitive global economic environment, it is not enough for firms to response the pressure of competition simply by internal organic growth. Thus, increasing the size of the firms through M&A activities, which is called inorganic growth, becomes one of the alternative strategies of many firms to strengthen their competitiveness. However, even though there are many M&A transactions, some of them fail because of the disagreement on the transaction price, and due to the lack of pricings standards, pricing becomes the most difficult part of the M&A transactions. In order to acquire most of stocks of the target firms, acquiring firms will pay a price above the the target firms’ market price, and the difference is the benefits that control shareholders can enjoy, so the transaction price involves control premium. This study constructs a regression model by 65 transactions of tender offers and stock exchange of Taiwan, trying to find factors affecting control premium. Accroding to the regression results, if acquiring firms don’t have control over the target firms before the transaction, the transaction is not a block trade, and acquiring firms get control after the transaction, the percentage of control premim is smaller, which means that there is a negative relationship between them. Besides, the percentage of control premium increases with target firms’ return on total assets before interest, taxes, depreciation and amortization, and decreases with target firms’ size, cash position, and the ratio of target firms’ cash position to acquiring firms’ cash position.