Anchoring Effect and Spin-offs: A Case Study of Taiwan Companies, Asus and Yulon
Applied Economics and Finance
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Title |
Anchoring Effect and Spin-offs: A Case Study of Taiwan Companies, Asus and Yulon
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Creator |
Lan, Yu-Wei; Department of Banking and Finance, Takming University of Science and Technology, Taipei, Taiwan.
Lin, Dan; Department of Public Finance and Taxation, Takming University of Science and Technology, Taipei, Taiwan. Lin, Lu; Department of Public Finance and Taxation, Takming University of Science and Technology, Taipei, Taiwan. |
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Description |
This study uses a case study method to examine the spin-offs of Asus and Yulon. Both companies show negative cumulated abnormal returns after spin-off announcements and then return to the anchoring price as at the announcement day. The results are in contrast to the findings of Veld et al. (2004) and Schipper and Smith (1986). However, our results are consistent with Nanda’s (1991) asymmetric information argument. Nanda (1991) suggests that the negative returns on the announcement day reflect overvaluation of the subsidiary company. The evidence shows that an anchoring effect is prevalent in companies conducting spin-offs in 2003. Also, the case study of “Asus Rule” in Asus’ spin-off points out the necessity of dynamic adjustments in industry policies in emerging markets.
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Publisher |
Redfame Publishing
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Date |
2015-01-21
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Type |
info:eu-repo/semantics/article
Peer-reviewed Article info:eu-repo/semantics/publishedVersion |
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Format |
application/pdf
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Identifier |
http://redfame.com/journal/index.php/aef/article/view/625
10.11114/aef.v2i1.625 |
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Source |
Applied Economics and Finance; Vol 2, No 1 (2015); 44-54
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Language |
eng
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Relation |
http://redfame.com/journal/index.php/aef/article/view/625/564
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Rights |
Submission of an article implies that the work described has not been published previously (except in the form of an abstract or as part of a published lecture or academic thesis), that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, in English or in any other language, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication. Copyrights for articles published in Redfame journals are retained by the authors, with first publication rights granted to the journal. The journal/publisher is not responsible for subsequent uses of the work. It is the author's responsibility to bring an infringement action if so desired by the author.
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