| Summary: | 碩士 === 國立臺灣大學 === 會計學研究所 === 98 === The purpose of this study is to investigate the relationship between corporate governance and the market reaction following the announcement of seasoned equity offerings (SEOs). This study use ownership structure and composition of board related variables to examine whether good corporate governance mechanisms can affect investors’ perception and reduce agency problems under seasoned equity offering context. Namely, this study expect firms with better corporate governance mechanism will invoke less negative cumulative abnormal return than their counterparts.
The empirical results reveal that board size, board occupancy ratio of controlling shareholders and control-cash flow right deviation of controlling shareholders have significant negative effect on market reaction of seasoned equity offerings. Further, independent directors have significant positive impact on market reaction under seasoned equity offering context. However, empirical results reveal insignificant coefficients of board chairman-CEO duality.
The above empirical findings have the following implications. First, for firms with stronger corporate governance mechanism, market reacts favorably as if investors believe firms have the ability to reduce agency problems or adverse selection under seasoned equity offering context. Second, based on my findings, firms can improve their corporate governance to signal that they will utilize the new capital properly in the future to enhance firms’ value.
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