The Effect of Capital Reduction on Stock Returns Evidence from Taiwan Stock Market

• Main Authors: Chin -Hu ,Teng, 鄧金虎
• Other Authors: Chih-Hsien, Lo
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/43069779036711108193

碩士 === 國立高雄應用科技大學 === 金融系金融資訊碩士在職專班 === 104 === A company which has cash capital reduction , it 's revenue doesn't grow with profit due to capital inflation. The company hopes to return cash to shareholders because after capital reduction, the stock capital will reduce and it will increase net asset value of each share、earning per share、price-earnings ratio、return on equity. To make up loss because of bad management, the capital reduction is used to improve the financial structure and increase net asset value of each share to prevent being full-cash delivery stock . In this paper, Event Study Method is used. The samples are cash capital reduction in Taiwan stock market as well as capital reduction for making up loss. The abnormal return (AR), the average standardized abnormal return (SAR) and the average cumulative abnormal returns (SCAR) are calculated 10 days before dividend day, dividend day and 10 days after dividend day. The t-test is used to test abnormal return. The cash capital reduction only has temporary positive abnormal returns. The motivation behind capital reduction is cash return to shareholders or company faces a limit to growth. The capital reduction for making up loss is a negative information to investors, so negative abnormal returns are in short term . To avoid investment failure , investors should observe company which is influenced by economy or industry is eliminated.