Market Reaction to the Distribution of Cash Dividend Using Capital Reserve

  • 陳 彥蓉

Student thesis: Master's Thesis


In 2012 the authority in Taiwan had passed the amended Article 241 of Company Act in which a company incurs no loss could distribute its legal reserve and specific kinds of capital reserve in whole or in part by cash The amendment enables a company to keep a more flexible dividend policy which is helpful for maintaining the stock price performance In order to examine the impact of distributing cash dividend with capital reserve on stock price we use the event study method and set the day of shareholders’ meeting as event day to examine how market reacts to the declaration effect The results show that abnormal returns of companies using capital reserve to distribute cash dividends would experience greater fluctuation (volatility) Besides in the multivariate regression analysis we observe that there exists a negative relation between the abnormal return and the declaration effect We infer that the probable reason for this phenomenon might be information asymmetry
Date of Award2015 Jul 6
Original languageEnglish
SupervisorHsuan-Chu Lin (Supervisor)

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