Impact of Legal Constraints on Corporate Value and Responsive Measures of the Corporate World: Taking for Example Merger of Advanced Semiconductor Engineering Inc. by Carlyle

• Main Authors: Hsiu-sheng Wu, 吳修生
• Other Authors: 鄭漢鐔
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/88841841473092134862

碩士 === 國立中央大學 === 財務金融學系碩士在職專班 === 95 === Mainland China is known for its cheap labor and vast domestic market, which in conjunction with the Chinese government’s meticulous effort to attract foreign investment via various incentives has made Mainland China one of the most promising economic bodies in the world. With Taiwan’s accession to the WTO, domestic capital market is progressively internationalized. Meanwhile, globalized economic development and collaborations have made it necessary for Taiwan’s economy to transform, and many corporations for the purpose of enhancing competitiveness and profitability are relocating their operational focuses to China. Sensitive political issues between two sides of Taiwan Strait, as well as the investment caps and technology/capital market constraints established by the Taiwanese government, prevent some of the Taiwan-based corporations from effective distribution of resources for global maneuver. Sensing the fact that Taiwan’s cross-strait policies have compromised corporate value, international private funds in recent years have been aggressively taking over local companies with their eyes on the unrealized profit potential they see. From the perspective of corporate operation strategies and value creation, this study scrutinizes the merger of Advanced Semiconductor Engineering Inc. (ASE Inc.) by Carlyle and incorporates the strategies of ASE Inc. into value-driven factors in an attempt to evaluate the impact of investment law constraints on corporate value the free cash flow discounted model. Research outcomes are as follows: 1.Legal constraints on investment will affect corporate competitiveness and cause a company to lose its competition edge. The fact that the limitation tends to reduce the free cash flow and lower the profit margin works against creation of corporate value and cause corporate value to be significantly underestimated. 2.Mainland investment limitations cannot effectively prevent Taiwanese companies from investing in Mainland China. In view of the economic incentives and the need for sustainable operation, Taiwanese companies are willing to pay the price for evading legal constraints. 3.Taiwan should lift its regulations that limit on Taiwanese companies’ investment in Mainland China. The action will help boost cross-strait trade activities and attract Taiwanese companies to invest in Taiwan. It will at least stimulate development of Taiwan’s financial industry and related service industries and may even encourage them to participate in global activities.