Mergers and acquisitions in Taiwan's high-tech industry (China)

The purpose of my study is to enhance the understanding of the impact of M&A activity by focusing on sample from the high-tech industry in Taiwan. I am mainly looking at how the M&A announcement is going to affect acquiring firms' return and future performance. My research questions are as follows: (1) Is there any abnormal return when acquiring companies announce merger and acquisition decisions? (2) Is the market reaction different when payment methods are cash instead of other methods (bond, equity, or combination)? (3) Is the market reaction different when the target company is a foreign company instead of a domestic company? (4) Does the acquiring firm get performance benefits from merger and acquisitions activity?; My samples are composed of 36 high-tech firms that conducted M&A in Taiwan from 1996 to 2001. I answer my first three questions by using event study methodology. Multiple linear regression is utilized to answer my last question. My empirical results are as follows: (1) Taiwan's high-tech M&A announcement brings positive abnormal return (AR) and cumulative average abnormal return (CAR) to the acquiring firms over the (-21, +21) interval. They are either statistically significant (-13, +15) or insignificant. The evidence shows that the M&A announcement affects stock price positively. It brings positive wealth to the acquiring firm's shareholders. (2) When the acquiring firm announces M&A with different payment method, the shareholders of acquiring firms gain less then when the payment method is cash instead of other payment method. (3) In Taiwan's high-tech company mergers, a different origin of targets has the different announcement effect. The domestic M&A contributes more wealth to the shareholders compared to the international M&A. (4) The multiple regression results of my study show that M&A does not improve long-term corporate performance in terms of Tobin's Q in Taiwan's high-tech industry M&A case.; From my study, we clearly see that M&A announcement can bring positive returns to the acquiring firms' shareholders; however, in the long term, firms' financial performance is not positively affected by the M&A activities. The announcement effect tells us that majority investors appreciate M&A activity, so the stock price reflects that investors are optimistic about the transaction. When looking at the result of the long-term performance study, we understand that M&A is not bringing the expected contribution to the firms. This is consistent with most M&A researches in the western literature. (Abstract shortened by UMI.)...