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Corporate Asset Sales in Taiwan

Author

Listed:
  • Meijui Sun

    (Department of International Business, Ming Chuan University, 250, Chung Shan N. Rd., Sec. 5, Taipei, 111, Taiwan)

  • K. C. Chen

    (Department of Finance and Business Law, California State University, Fresno, 5245 N. Backer Avenue, Fresno, CA 93740, USA)

Abstract

In this paper, we study a sample of 179 corporate asset sales in Taiwan between 1993 and 2003. We find that corporate asset sales in Taiwan enhance parent firm value with cumulative abnormal returns of 1.7715% for the pre-announcement five-day period and 0.6086% for the two-day announcement window. This finding is consistent with the evidence discovered in both UK and US. We also examine whether asset-sale gains are positively related to managerial performance, private lender monitoring, the use of proceeds, the type of asset sales, the profitability of asset sales, and the relative size of asset sales. Our cross-sectional regression results indicate that all variables, except private debt monitoring and relative size, appear with their predicted signs, but not all of them are statistically significant. During longer event windows, we find that only managerial performance measured by Tobin's q and the use of asset-sale proceeds can explain the gains from corporate asset sales in Taiwan.

Suggested Citation

  • Meijui Sun & K. C. Chen, 2009. "Corporate Asset Sales in Taiwan," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 12(01), pages 87-102.
    • Handle: RePEc:wsi:rpbfmp:v:12:y:2009:i:01:n:s0219091509001551
    DOI: 10.1142/S0219091509001551
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    More about this item

    Keywords

    Corporate asset sales; Taiwan; corporate restructuring; divestitures; event studies;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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