Journal of Accounting, Finance & Management Strategy





Volume 17, Number 1, June 2022

Empirical Study of Market Reaction to Family Enterprises, Political Affiliations and M&A Activities


Most literature on M&A performances center on corporate governance, ownership structure (family businesses or not), and the dynamics between acquirers and targets (Kiymaz and Mukherjee, 2000). However, the political connections of board members may enhance shareholder value by helping to acquire resources and accelerating the negotiation process (Goldman, Rocholl, and So, 2009). Thus, this study employs the market model and risk adjusted model in the estimate of the shareholder wealth effect on the M&As of the financial industry in Taiwan in 2000-2012. The purpose is to validate whether the market response is different due to the consistency between the alignment of political affiliations and family ownership (i.e. the consistency of political inclinations between the boards and CEOs of acquirers and targets, or with the chairpersons/CEOs hired by owning families for political purposes). The research findings provide complementary evidence to the study of financial institutions and corporate governance in the context of political associations, and can serve as a reference for investors seeking to examine M&As in the financial industry.

Keywords: M&As, Political, Affiliations, Political Connections, Family Enterprises

JEL Classification: D22, G14, G34