Reorganization Filing, Court Decision, and Shareholder Wealth: An Empirical Analysis of TSE-listed Companies

• Main Authors: Yin-yin Lee, 李英瑛
• Other Authors: Gili Yen
• Format: Others
• Language: zh-TW
• Published: 2003
• Online Access: http://ndltd.ncl.edu.tw/handle/b85jvn

碩士 === 朝陽科技大學 === 財務金融系碩士班 === 91 === At the moment of listing, companies listed at Taiwan Stock Exchange generally speaking are financially sound. However, due to changes in business environment or management team, financial crisis may still occur. The present study is therefore motivated to examine empirically the impact of corporate reorganization on stockholder wealth on the basis of stock price movements for the following two reasons: First, the law of corporate reorganization is primarily meant to protect the interests of shareholders. Second, the availability of daily stock prices provides us with an unambiguous estimate of the market value of shareholder wealth. After meticulously collecting the largest possible sample of reorganization-filing cases covering the period from the promulgation of corporate reorganization law in 1966 until 2002, the final sample includes 22 reorganization-filing listed firms─among them, 15 firms are approved and 7 firms are dismissed, by the court, respectively. The primary empirical findings are as follows: For the first event day of reorganization-filing, based on the price movement in its neighborhood, the null hypothesis that no systematic difference in rate of changes of stock prices of the filing firms, before and after the filing, cannot be rejected. In other words, the notion of “asset rebirth” has not gained empirical support. For the second event day of court decision, based on the observation of both stock price movements and capital market estimates in its neighborhood, the approved group as expected has fared better when compared with the dismissed group. In other words, if the alternative is dismissal of petition for reorganization, we cannot reject the view that the court’s approval of corporate reorganization plan is beneficial to shareholders.