The Study On Taiwan Industry's Shareholders Wealth And Operating Performance Associated With Mergers & Acquisition Synergies

The objective of this study is probing a question if Taiwan acquiring companies perform better after M&A activities. From the point of view of acquiring companies, this research respectively measures the short-term effect of M&A announcement and long-term impact on operating performance with stock return and financial ratios. Further, this research is proving how the Information Asymmetry, potential Agency Problem and other controlled variables, such as geographic regions of target companies, industry relatedness, past performance, ownership of managers and shareholders, debt ratio, relative size, degree of agency problem, business cycle, industry classification and M&A period of the acquiring company affect the performance of acquiring companies. In addition, this research tries to find out these important factors how to affect the corporates' performance after M&A activities.In the aspect of the M&A activities impact on operating performance of Taiwan Industries, this research try to analysis the M&A synergies effect on the reaction of Taiwan Industries' operating performance. Based on the theory of M&A synergies, this research will divide M&A synergies into overall synergy, operational and managing synergy, market synergy, financial synergy, tax synergy, cash-flow synergy and stock structure, further. In the aspect of the M&A activities impact on shareholders wealth of Taiwan Industries, this research try to analysis the M&A synergies effect on the reaction of Taiwan Industries' stock price and change of the average abnormal returns. The important theory and empirical results of this research are listed below:1. In the aspect of the M&A theory, this research referred to the M&A negotiated price model of Hansen (1987) on the hypothesis of the information asymmetry. The model inferred the three conclusions of " the lower of the degree of information asymmetry, the better of operating performance of Taiwan Industries after M&A activities", "the more of the M&A synergies, the better of operating performance of Taiwan Industries after M&A activities" and "the less of the agency cost of acquiring companies, the better of operating performance of Taiwan Industries after M&A activities".2. In the aspect of the M&A activities impact on operating performance of Taiwan IPO industries, the empirical results of this research found out the conclusions listed below: the M&A activities impact on operating performance of Taiwan IPO Industries created positive operational and managing synergies, but couldn't create positive overall synergies, market synergy, financial synergy, tax synergy and cash flow synergy. Besides, the M&A activities impact on operating performance of Taiwan IPO Industries increased the ownership of the directors and supervisors, the pledge of the directors and supervisors, the managers, investment institutional and financial institutions.3. In the aspect of the M&A activities impact on shareholders wealth of Taiwan IPO industries, the empirical results of this research found out the conclusions listed below: When M&A announcement of acquiring companies, the test of Average Abnormal Returns(AR) and Cumulative Average Abnormal Returns(CAR) are significant in both the Exchange and the OTC market. This evidence shows that M&A announcement of acquiring companies effect stock price and shareholders wealth. But when acquiring companies issue the M&A announcement, this evidence of this research shows that stock traders expect well and invest more result in the raise of stock price, its average abnormal returns (AR) and cumulative average abnormal returns (CAR), but falling soon. When the information of M&A announcement of Taiwan IPO industries was blabbed in advance, its stock price reacted to the increasing on the stock market.4. This research tries to find out these important factors how to affect the acquiring corporates' performance and shareholders wealth after M&A activities. The result of this research listed below:(1). If the target companies are Taiwan IPO industries in both the Exchange and the OTC market, the test of the operating performance is no significant, but the test of its Average Abnormal Returns(AR) and Cumulative Average Abnormal Returns(CAR) are significant. This evidence shows that M&A announcement of acquiring companies affected stock price.(2). If geographic regions of the target companies are in Taiwan, the test of its operating performance and shareholders wealth are no significant. This evidence shows that geographic regions of the target companies didn't affect its operating performance and shareholders wealth.(3). No matter what industry relatedness it is, the test of its operating performance and shareholders wealth are no significant, uncertainly. This evidence shows that industry relatedness didn't affect its operating performance and shareholders wealth, uncertainly. But the cumulative average abnormal returns(CAR) of the unrelated M&A announcement were better than related M&A announcement of acquiring companies. (4). Except relative size of the acquiring companies affect the operational and managing financial indicators, other financial indicators are no significant. This evidence shows that relative size of the acquiring companies didn't affect its operating performance and shareholders wealth.(5). The debt ratio of the acquiring companies affect the operating performance and shareholders wealth, positively. So, the cumulative average abnormal returns(CAR) of the acquiring companies of lower debt ratio were better than the acquiring companies of higher debt ratio.(6). When business cycle is prosperous, the M&A activities impact on operating performance of Taiwan Industries are better.(7). The M&A activities impact on operating performance of the traditional businesses are better.(8). The M&A period of the acquiring companies affect the operating performance and shareholders wealth, positively.(9). The past performance of the acquiring companies don't affect the operating performance and shareholders wealth, significantly. But Average Abnormal Returns(AR) and Cumulative Average Abnormal Returns(CAR) of the better past performance acquiring companies are better than the less.(10).The stock structure , such as the ownership of the directors and supervisors, the pledge of the directors and supervisors, the managers, investment institutional and financial institutions, don't affect the operating performance and shareholders wealth, significantly.