The Impact of Corporate Governance on Announcement Effect of Stock Repurchase

• Main Authors: Miao-Ling Zeng, 曾妙齡
• Other Authors: 王朝仕
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/37ycqc

碩士 === 國立臺中科技大學 === 企業管理系碩士班 === 105 === This research was to discuss whether the investment amount of corporate governance has impacts on CAR (Cumulative Abnormal Returns) of stock price during the announcement of stock repurchase. This research adopted event study from 2006 to 2009 to examine the short-term and long-term reactions of the stock price after the stock repurchase announcement. We referenced the corporate governance index established by Chen, Kao, Tsao and Wu (2007), which divides companies into high corporate governance, moderate corporate governance, and low corporate governance. Through the multiple regression model, the degree of corporate governance and the relations between the CAR at different times were verified after the implementation of the stock repurchase program. The empirical results indicated that the stock price was undervalued before the announcement of the stock repurchase. There was a short-term positive reaction after the announcement, and the stock price returned to a reasonable level in the long-term. There was no statistical significance in the CAR of the corporate governance index constructed for this study after the announcement of the stock repurchase. It is inferred that, due to Taiwan’s private equity-based securities market, when investors received news of the stock purchase plan and the stock prices were converted into undervalued price signals, the investors’ speculative psychology was triggered without considering the extent of the company''s commitment to corporate governance in their investment criteria. This result echoed the limited attention proposed by scholars, that is, the limited capacity of the investors in processing information. Investors must raise attention on their assets through the transmission of certain information. The three indicators that easily attract investors’ attention are usually high level of trading volume, unusually high (low) returns, and increased media coverage (or company information exposed by the media). The irrational investment behaviors of investors have made behavioral finance the focus of attention of modern scholars.