| Summary: | 碩士 === 靜宜大學 === 會計學系研究所 === 91 === Abstract
A few years ago, cross-holdings were allowed by the Company Act in Taiwan. The practice that parent companies repurchase their own stocks outstanding through subsidiary companies, which is so called parent-subsidiary cross-holdings transactions, was popular in the past decade. From the economic substance point of view, the parent and subsidiary companies are treated as a single economic entity, and the parents’ stocks held by their subsidiaries are treasury stocks in substance. There are two questions being examined in this study. The first question is whether the transactions that subsidiary companies purchase parents’ stocks convey any information about parents’ future prospects? The next question is to verify the relationship between cross-holdings transactions and the financial structure of parent companies. About the first question, this study develops two hypotheses with the purpose of understanding the information content of cross-holdings transactions. As to the second question, three hypotheses are developed. Whole samples are divided into electronic industry, traditional industry and entire industry. Then we examine the relationship between cross-holdings transactions and parents'' financial structure through the regression analysis.
Sampling period is between 1994 and 2001. The samples related to the first question and the second question are independent. The main findings of the first question are as follows: stock market responses positively to the subsidiary company''s purchasing stocks prior to the transactions completion date and negatively after the transactions completion date.
With regard to the second question, the main findings are as follows. At first, for the sub sample of electronic industry we are unable to find the relationship between the proportions of subsidiary company''s purchasing the parents'' stocks and the parents'' financial structure. Secondly, the performance of profitability, debt-paying ability and turnover ratio ability for the sub sample of traditional industry is negatively associated with cross-holdings transactions. Thirdly, for the sample of entire industry, the performance of the profitability and debt-paying ability of entire industry is negatively associated with cross-holdings transactions.
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