The Effects of Holding Company Transition on Firms Market Value and Performance: Empirical Analysis on the U.S. Holding Companies
지주회사 전환의 기업 시장 가치와 성과에 대한 효과 실증 분석: 미국 지주회사를 중심으로
- 사회과학대학 경제학부
- Issue Date
- 서울대학교 대학원
- Holding company; corporate governance; event study; abnormal return; panel data; stock price
- 학위논문 (석사)-- 서울대학교 대학원 사회과학대학 경제학부, 2017. 8. 이근.
- This paper empirically analyzes the impacts of holding company transition on the U.S. firms market values measured by stock prices and performances. Three event study methods presented by Brown and Warner (1985) are used to evaluate the effects on daily abnormal stock returns with different estimation and test windows for the robustness of the results. The results show that stock prices increase after the firms public announcements of adopting the holding company system. The event study analysis proposes that a firms reputation among investors rises along with the holding company system, corresponding with the prediction that the positive impacts of the transition on corporate governance and managerial efficiencies leads to the improvement of investors perception.
In contrast, conducting the panel data analysis with quarterly financial data, the paper finds that the holding company transition do not have any statistically significant effect on firms performances and growth potential, measured by ROA, ROE, turnover ratio and revenue growth rate. The results on performances imply that the holding company transition does not create any specific values in a firm to improve its profitability and growth potential, but mainly works as a means of promoting firm values during the period of stock price stagnation caused by diversification. In addition, considering that stock price represents the potential value of a firm, the fact that holding company transition of the U.S. companies has the effects only in short-run suggests that investors are involved in the short-termism, mostly focusing on the short-run performances and dividends, and that the U.S. stock market is inefficient in evaluating the market values of firms which convert to holding companies.