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Association between Credit Rating Changes and High-Tech M&A in Taiwan

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  • Jo-Hui Chen

    (Chung Yuan Christian University)

Abstract

The primary purpose of this study is to examine the impact of high-tech and non-high-tech mergers and acquisitions (M&A) on the credit rating changes in Taiwan. We utilized the ordered probit model with random effect for the empirical works. A variety of econometric tests were conducted using pooled data of 101 firms in Taiwan over the period Sep. 1996 to Dec. 2001. This paper tries to examine whether the financial and strategy factors affect the credit risks. Our results indicate that Insider Ownership and Leverage Ratio are negatively related to credit rating changes, while Return on Equity and High-tech Firm are positively related to credit rating changes for both pre- and post-M&A activities. Although higher Institutional Ownership increases in credit rating changes for pre-M&A, it decreases credit rating changes for post-M&A.

Suggested Citation

  • Jo-Hui Chen, 2003. "Association between Credit Rating Changes and High-Tech M&A in Taiwan," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 8(3), pages 77-95, Fall.
  • Handle: RePEc:pep:journl:v:8:y:2003:i:3:p:77-95
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    More about this item

    Keywords

    Acquisition ; Firm ; Merger;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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