The announcement effect of target companies acquired by private equity fund

The thesis use event study method, Wilcoxon-Test and T-test to examine whether the private equity fund announce to merge the target company which listed in Taiwan’s stock market will have obvious announcement return or not. This thesis also try to find the characteristics which will affect the CAR of the target company, for example, the target company is belong to financial industry or not, deal size, holding ratio and premium. The common characteristics of target companies that private equity announces to merge and acquire are generally undervalued, with high growth rate and accompanied with leading technology. According to the Ljungqvist and Richardson (2003), the return of private equity are obviously greater than the return of SandP 500 with5 to 8 points. This thesis find out the positive announcement effect exists in Taiwan’s companies that are acquired by the private equity finds during 1999 to 2016.