A STUDY ON THE DIFFERENCES IN ADOPTING CASH REFUND CAPITAL REDUCTION AND STOCK REPURCHASE BY COMPANIES IN BULL AND BEAR STOCK MARKETS
Journal Title: Asian Economic and Financial Review - Year 2014, Vol 4, Issue 9
Abstract
This paper investigates the characteristic differences of variables relating to financial performance and corporate governance of companies in Taiwan implementing the policies of cash refund capital reduction or stocks repurchase, under considerations of market situations of bull and bear markets. Conversely, this paper employs Logistic regression to analyze how financial performance and corporate governance variables affect company decisions to choose the policies of cash fund capital reduction or stocks repurchase. According to the statistics, companies are more likely to conduct cash refund capital reduction in a bullish market period and stock repurchase in a bear market. The evidence results find that, companies have better profitability, lower debt ratio, higher foreign ownership, and increased potential growth opportunities in the period of cash refund capital reduction. Especially, in a bear market, the excellent characteristics of the sample company can be better highlighted by cash refund capital reduction. In the period of stock repurchase, the characteristic of a relatively higher level of privy ownership can be observed. According to the regression results, companies tend to adopt cash refund capital reduction when corporate profitability is better and have higher levels of foreign ownership. A company with greater cash flow per share and equity pledge ratio is more likely to adopt stock repurchase.
Authors and Affiliations
Ma-Ju Wang| Associate Professor, Department of Finance, National Kaohsiung First University of Science and Technology, Taiwan, Yu-Fan Chan| Department of Finance, National Kaohsiung First University of Science and Technology, Taiwan
Keywords
Related Articles
- EP ID EP2077
- DOI -
- Views 463
- Downloads 22
CORPORATE GOVERNANCE AND FINANCIAL REPORTING IN THE NIGERIAN BANKING SECTOR: AN EMPERICAL STUDY
The objective of corporate governance in the strategic management of the banking industry in Nigeria is to ensure hearth financial system and economic development .This study therefore discusses the corporate governanc...
THE FACTORS EFFECT TO THE FINANCIAL EFFICIENCY OF FDI (FOREIGN DIRECT INVESTMENT) ENTERPRISES LOCATED IN HO CHI MINH CITY-VIET NAM
This paper is to examine and evaluate the operational efficiency at the enterprises that have foreign investment at HCMC in the stage 2007-2011. The research also evaluates the factors that effect to financial effect, es...
FIRM’S LIFE CYCLE AND OHLSON VALUATION MODEL: EVIDENCE FROM IRAN
Ohlson prediction and valuation models Ohlson (1995) are based on firm book value, accounting profit and the assumption of "randomized, balanced and stabilized abnormal earnings". On the other hand, the significance of r...
THE EFFECT OF EXCHANGE RATE FLUCTUATIONS ON ECONOMIC GROWTH CONSIDERING THE LEVEL OF DEVELOPMENT OF FINANCIAL MARKETS IN SELECTED DEVELOPING COUNTRIES
This study aimed to investigate the effect of exchange rate fluctuations on economic growth considering the rate of development of financial markets in developing countries over the period 1986-2010. The effects of varia...
EFFECTS OF FOCUS OF ACCOUNTING RESEARCH ON THE QUALITY OF ACCOUNTING EDUCATION IN MALAYSIAN UNIVERSITIES
This paper reviews the impact of focus of research in accounting on the quality of accounting education in Malaysian Universities. Research in accounting is very important in Malaysian Universities, in particular, and t...