An Empirical Examination on the Accounting Evaluation of Financial Holding Company in Taiwan

Based on disclosed information on the Internet, government data, and published financial information of Financial Holding Companies in Taiwan, this report investigates the effect of adjusted net assets, adjusted Earnings Per Share and supplementary information on stock price of Financial Holdings Companies in Taiwan.
According to the analytical study of Financial Holdings Companies and financial industries, a key finding indicates that banking remains the core and dominant part of the overall financial industries and the focus of aggressive corporate development of each financial holding company. The varieties of financial sectors in which subsidiaries of Financial Holding Companies in Taiwan operate give rise to different ways of revenue and expense expression, and each financial holding company has its own way of structuring asset and liability component which presents a different risk-and-return model. Information obtained from public domain of both the Non-Performing Loans of banks and embedded value of life insurance companies are considered as the most difficult issues to evaluate by investors.
The empirical results indicate that adjusted net asset value of a company is a better indicator for evaluating year-end stock price or the stock price of the following January. In contrast, adjusted EPS and its supplementary information are not significantly relevant to stock price.