| Summary: | 碩士 === 國立高雄第一科技大學 === 財務管理系 === 89 === Although a higher pledge ratio of insiders indicates a higher demand for funds,
there are two possible explanations underlie this higher pledge ratio. First of all, a
higher pledge ratio may result from a financial crisis which subsequently causes a lower
stock price. In other words,there is a negative relationship between a company’s pledge
ratios and stock prices. Second,a higher pledge ratio may indicate an increase in
investment which will then cause stock prices to rise. Thus,there is a positive
relationship between a company’s pledge ratios and stock prices
The main purpose of this thesis is to study the relationship between a company’s
pledge ratios and stock prices. Also,we examine if the relationship should change under
different economic situations. Based on the data of fifty-five Taiwan Electronic Listed
Company from January 1998 to December 2000 ,our empirical results show that:
(1) there are fifteen companies whose relationships between pledge ratios and stock
prices are pasitive,twenty-two companies whose relationships are negative,
and eighteen companies whose relationships are insignificant.
(2) there are nineteen companies whose relationships between pledge ratios and
stock prices are affected by different economic situations,and thirty-five
companies whose relationships are not affected.
(3) there is no significant relationship between a company’s pledge ratios and
rates of return on stocks. Moreover,the relationship is not affected by different
economic situations.
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