Why Do Controlling Shareholders Sell Their Remaining Ownership Stake?
|關鍵字:||併購;控制股東;出清持股;異常報酬;事件研究法;merger and acquisition;controlling shareholder's;selling ownership stake;abnormal return;event study|
This paper aims to investigate what leads controlling shareholders traded firms to sell their remaining ownership stake. We use the data of Taiwan’s cases of merger and acquisition from 1999 to 2014. After we select the targets must be non-related to the acquirers, we have 111 companies as the targets. In addition, we find 332 assets-matched firms and 333 propensity-score-matched firms to compare with the targets. Data shows that in the corporate governance, less power right of controlling shareholders to participate the distribution of cash flow, the more deviations of voting rights and seat rights, these mean that controlling shareholders’ holdings and the control power become less, high supervision of outside blockholders, and shareholders participating in operating become less. Therefore, stimulate the controlling shareholders to sell their stake. In the stock market liquidity, high stock return volatility causes high equity risk. Hence, stimulate the controlling shareholders to sell their stake. In financial structure, when the firm confronts with the high financial leverage risk, overvalued assets, worse operating profitability, and the worse performance of the firm’s investment income. Consequently, the probability of controlling shareholders selling their stake becomes higher. Furthermore, the short-term announcement effects are significantly positive associated with the abnormal returns of the targets. This study provides an in-depth view of the controlling shareholder's decision to sell their stake. We expect can make investors select targets by reference.