The Relative Value of Growth and Stock Price Return on The Signal of Merger or Acquisition

• Main Authors: TSENG LI-CHIN, 曾麗卿
• Other Authors: Dr.LEE TSUNG-PEI
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/85718324921719118426

碩士 === 輔仁大學 === 金融研究所 === 94 === This study discusses the stocks which are issued in the market and classified by RVG ratio as an indication, and investigates whether the stock price return will be significant different when the signal of merge and acquisition are happened. We also compare with the significant difference of performance between these two groups based on P/B ratio. Finally, we will discuss while M&A event is declared which classification is useful. The results of this study are summarized as bellow： 1. The coefficient of correlation between P/B ratio and RVG ratio is 0.1264. The linear relationship is not very strong. It means these two classification is different. 2. When companies within different RVG ratio receive the M&A growth signal, the stock price return of high RVG group is positive. Especially, there is strong evidence that the average abnormal return of three days is significantly greater than 0. For high RVG group, investors will give the positive response of the huge growth of sales. On the other hand, the stock price return of low RVG group is negative. There is strong evidence to conclude that the stock price return will be significant difference between high RVG and low RVG during the event period. 3. The result is that the stock price return of high P/B group is not positive and low P/B group is not negative exactly when M&A event is happened. There is not strong evidence of a significant relationship between the return of value stocks and growth stocks based on P/B ratio when the M&A event is happened. Altogether, when the M&A event is declared the classification based on RVG ratio can be more accurate in calculating the stock return rather than P/E ratio. It is more useful for investors.