||A Study of Long-Term Operating Performance for Taiwanese Firms after Capital Deduction
||Institute of International Management (IIMBA--Master)(on the job class)
Under normal circumstances, companies would increase their capital in order to generate more business opportunities and make more money. However, when facing a dramatic change of operational environment, in order for the company to survive and keep up with appropriate financial ratios, companies will maintain their original capital or even deduct it.
The trend has been more and more obvious and yet we do not know much about that. Here we want to discuss the reasons for which companies do capital deduction and the types of capital deduction currently used. More importantly, we want to know the long-term performance of those companies after the capital deduction under various circumstances.
This study will review the reasons behind capital deduction and the procedure of doing it. We will also review three major methods to do capital deduction and then look at the long-tern operating performance of those companies that do capital deduction.
TABLE OF CONTENTS
TABLE OF CONTENTS III
CHAPTER ONE INTRODUCTION 1
1.1 Research Background and Motivation 1
1.2 Research Objectives 3
CHAPTER TWO LITERATURE REVIEW 5
2.1 Rationale for Capital Reduction 5
2.1.1 Cash Dividends and Share Repurchase 6
2.1.2 Capital Reduction for Making Up Losses 13
2.2 Research Hypothesis 14
CHAPTER THREE DATA AND METHODOLOGY 17
3.1 Data Source 17
3.2 Sampling Criterion 17
3.3 Measuring Long-run Operating Performance 18
CHAPTER FOUR EMPIRICAL ANALYSIS 23
4.1 Data Summary 23
4.2 Regression Model 26
4.3 t-Test 31
CHAPTER FIVE CONCLUSION 35
5.1 Implication 35
5.1.1 Adjusted Capital Deduction Firms’ Operating Performance: Median and Average 35
5.1.2 Regression Analysis for Company’ Long-Term Operating Performance 37
5.1.3 More Finding on the Individual Group using Different Approach to do Capital Deduction 37
5.2 Limitation and Discussion for Future Research 38
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