The Effect Of Corporation Reducing Capital On Stock Price

Since 2000,there are 1,050 times of purchase backward C/S(Common stock) had happened(includes formal and practical reducing capital),and are 678 reducing capital events(ie.,purchase backward C/S than write is off).This research is focus on the rule at the 2^nd point of No.28 of Taiwan Security Exchanging Law.As confirmed by board meeting to purchase backward T/S(Treasury Stock),and its purpose is in order to maintain the affiance of firms and profits of stockholder,the policies would be discussed and pointed how the stock price effected after proceeding with.After neaten and analysis literatures,there are five hypotheses as follow:1.Did write off T/S would produce positive AR(Abnormal Return)? 2.Did write off T/S would produce the different return between different industries? 3.Did write off T/S would produce the different return between different markets? 4.Did write off T/S would produce the different return between different levels? 5.Did write off T/S would produce the different return between different return?This research used event analysis in August,9 2000 to January,30 2008.To get five conclusions which they are as following:Writing off T/S would produce positive AR Different Industries would not have the same affection to writing T/S off;2.The best performance is in electronics and the worst is financial stocks;3.Bought backward T/S and wrote them off from bull and bear market was producing positive AR.But bear market would have higher feedback than bull;4.Better credit rated firms purchased backward T/S would have more positive profitable on stock price. Whatever,in investing(mid create rated firms) declared T/S treatment,it had bigger rebound compared with the others;5.While profitable firms buying backward the T/S, the stock has better performance in market but in contrast unprofitable ones would be worse.