The Impact of Cash Reduction Announcement Abnormal Return

• Main Authors: HUANG, SHIH-MIN, 黃詩閔
• Other Authors: HUANG, SHAIO-YAN
• Format: Others
• Language: zh-TW
• Published: 2019
• Online Access: http://ndltd.ncl.edu.tw/handle/64jpdt

碩士 === 國立中正大學 === 會計與法律數位學習碩士在職專班 === 107 === This study aims to investigate the effects of different purposes of capital reductions and the frequency of capital reductions on stock prices, taking listed companies that had implemented capital reductions as objects of this study. This dissertation uses event study methodology to analyze whether a capital reduction contributes to an abnormal return. The empirical results of this study are as follows. First, a capital reduction has positive effects on short-term stock prices. For stock market investors, a capital reduction can still be regarded as a bullish development in the short term. Second, if the empirical study is conducted based on contents of material information, capital reductions bring about significantly positive abnormal returns when the contents of material informaton pertain to distribution of idle funds and an increase in return on stockholders’ equity, while capital reductions have no significant abnormal returns on stock prices when the contents of material information concern group’s operational planning. Moreover, the effects sustain longer when the subject of material information is distribution of idle funds than when the subject of material information is to increase return in stockholders’ equity. If TWSE-listed companies are differentiated from TPEx-listed companies, the effects of adjustments on stock prices of TWSE-listed companies happen ealier than those on stock prices of TPEx-listed companies. Third, if the empirical study is conducted based on the frequency of capital reductions, capital reductions result in significantly positive abnormal returns when the contents of material information concern distribution of idle funds and an increase in return on stockholders’ equity. However, the frequency of capital reductions has no effects on abnormal returns. Lastly, if the empirical study is conducted based on companies that had announced a capital reduction and withdrawn it afterwards, a capital reduction has significantly positive effects on abnormal returns on the day after the announcement date, while it has significantly negative effects on abnormal returns on the day before the announcement date.