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1 – 5 of 5Yao-Chun Tsao and Wen-Kuei Chen
The ‘managed stock’ market in Taiwan is neglected by the authorities and general investors. In this paper, we explore the link between financial trait and stock price changes in…
Abstract
The ‘managed stock’ market in Taiwan is neglected by the authorities and general investors. In this paper, we explore the link between financial trait and stock price changes in this special market.
Overall, we analyze and discuss managerial implications for institutional investors, general investors and the authorities as well.
Wei Chieh Liang, Yao Chun Tsao, Wen Kuei Chen, Hsing Chau Tseng and Ke Jian Yu
– The purpose of this paper is to integrate Modigliani-Miller (MM) theory and stock repurchases strategy to procure a practical concept for capital decision.
Abstract
Purpose
The purpose of this paper is to integrate Modigliani-Miller (MM) theory and stock repurchases strategy to procure a practical concept for capital decision.
Design/methodology/approach
No-arbitrage proof model deduction was used in this study. The authors consider corporate tax and funding sources as two crucial factors drawn in the model. The paper derives some propositions by trichotomy property and keeps the key assumptions of MM Capital Structure Theory.
Findings
There are two different effects on firm's value through stock repurchases. The positive effect occurs on firm's value through stock repurchases with loan fund. And the negative impact exists on firm's value through stock repurchases with idle fund.
Research limitations/implications
Notably, in the real world there are three limitations with such an arbitrage transaction (Stulz, 2000). The first one is the default risk, and the second one is transaction costs and the last one is the perfect credit market assumption. In the near future, the authors suggest it would be interesting to involve the interest rate factor and contingent tax variable into our model.
Originality/value
On the basis of no arbitrage opportunity, this paper considers both trichotomy property and MM theory. It proves the share repurchase strategy should be financed by borrowing fund. In contrast, share repurchase should not be executed with idle fund because of opportunity cost.
Details
Keywords
Zaleha Abdul Shukor is a Senior lecturer in Accounting at the School of Accounting, Universiti kebangsaan Malaysia. She obtained Masters of Commerce from Macquarie Uni, Australia…
Abstract
Zaleha Abdul Shukor is a Senior lecturer in Accounting at the School of Accounting, Universiti kebangsaan Malaysia. She obtained Masters of Commerce from Macquarie Uni, Australia and BSc (Acctg) from Syracuse Univ, NY. She is pursuing her PhD at Universiti Teknologi MARA, Malaysia. Her research interests include, financial reporting and capital market-based research.