A Study on the Announcement Effect and Value Change of Banks in Taiwan after Merger – with Example of the Merger of Specific Government Share and Private Bank

• Main Authors: Hsieh, Juei-Yuan, 謝瑞員
• Other Authors: Dr.GOO,YEONG-JIA Dr.CHEN,DAR-HSIN
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/90595440215322321602

碩士 === 國立臺北大學 === 國際財務金融碩士在職專班 === 94 === ABSTRACT A Study on the Announcement Effect and Value Change of Banks in Taiwan after Merger – with Example of the Merger of Specific Government Share and Private Bank by Hsieh, Juei-Yuan June 2006 ADVISOR(S): Dr. GOO, YEONG-JIA Dr. CHEN, DAR-HSIN DEPARTMENT: EXECUTIVE MASTER OF BUSINESS ADMINISTRATION IN INTERNATIONAL FINANCE MAJOR：INTERNATIONAL FINANCE DEGREE：MASTER OF BUSINESS ADMINISTRATION After going through the economic globalization in 1980s and 1990s, mergers have been widely practiced to meet operating demands and maintain competitive advantages. Local enterprises in Taiwan, to expand the market under fierce global competition, enter new markets, and improve the organizational structure, have begun the process of merging. As the global trend changes in the 21st century, the profit target and merger effect have been questioned, and the concept of anti-merging is emerged. Division and sale of merged companied become the trend. Enterprises are becoming specialized. The merge of banking businesses in Taiwan have aroused controversies. Therefore, this study intends to identify possible aspects of value creation based on the merger of banks in Taiwan, in order to find out early signs of success in merger. The empirical method adopted in this study was event study method. The samples were banks listed in the Taiwan Securities Exchange, announced merging from 2001 to the end of 2005, and completed the process of merging. This study, based on the Information Theory, discusses the announcement effects on the stock prices of acquirer and acquired banks, as well as on the joint venture state-private and private banks, and the long-term stock price changes, in order to serve as references to the banks. The results are as follows: 1. The announcement effect on the stock price: The announcement has significant negative effect on the acquirer bank and positive effect on the acquired bank. The decline in the stock price of the acquirer bank and rise in the stock price of the acquired bank is because the acquired bank has to hand out the right of management, so the share-for-share exchange ratio may have premium and is reflected on the stock price. 2. The announcement effect on the joint venture state-private and private banks: The announcement has insignificant effect on the acquirer bank for acquiring joint venture state-private banks. The announcement effect was significantly positive prior to the announcement and significantly negative afterwards, thus, the effects offset each other. It is because the acquiring of joint venture state-private banks has no effect on investors. The announcement has significant negative effect on the acquirer bank for acquiring private banks. It is because investors hold negative attitude toward acquiring of private banks. The announcement has significant positive effect on the acquired joint venture state-private banks. It is because investors believe that the management of joint venture state-private banks has no efficiency, and the merger could utilize the unrealized potentials, thus, the stock price of acquired joint venture state-private banks would increase. There is no significant effect on acquired private banks because the acquiring of joint venture private banks has no effect on investors. 3. The long-term value change: The longer-term values of banks acquired by financial companies, such as Cathay United Bank, E.Sun Bank, Taishin Bank, and China Trust, are increased, except for Taipei Fubon Bank. The result indicates that acquiring private banks has positive effect on the overall shareholders’ values, but acquiring joint venture state-private banks has uncertain effect.