An Empirical Study on Stock Repurchases by Taiwan Publicly Listed Companies

• Main Authors: Hsiao-Chi Tsai, 蔡曉琪
• Other Authors: Chung-Yueh Chang
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/44988417997465950557

碩士 === 國立臺北大學 === 會計學系 === 89 === This empirical study examines Taiwan publicly listed companies that announced their first stock repurchase from August through December in 2000. Event study and regression analysis are applied to test the market reaction of the repurchase announcements. Three primary objectives of this empirical study are as the following: 1. whether announcements of stock repurchases contain information content and thus supports signaling hypothesis; 2.whether the stock market over-reacts or under-reacts to the repurchase announcements; 3.what are the underlying factors that are associated with the announcement effects? The research findings are as the following. First of all, the average CAR (cumulative abnormal returns) resulting from the stock repurchase announcements was 5%, indicating that the announcements can reduce information asymmetry between the management and the investors. Thus, the signaling hypothesis of stock repurchase is supported. Secondly, those companies that have positive CAR during the announcement periods exhibit even higher security returns in subsequent periods. However, those companies that have negative CAR during the announcement periods do not show higher security returns in subsequent periods. Last, this study finds that past profitability, price-to-book-value ratio, and expected repurchase percentage are the underlying factors that are associated with the announcement effects. Specifically, the higher the pasts profitability, the higher the CAR. The lower the P/B rate or the higher the expected repurchase percentage was, the higher the CAR will be.