There have been great
efforts in the finance literature to enhance the understanding of companies
experiencing substantial growth. IPO and mergers and acquisitions (M&As)
are very important restructure options for firms as they grow with complexity
arises from internally and externally. Solution-driven strategies should be
desirable for firms go public, especially in emerging economics regime, such as
Taiwan. In this study, we examine the key predictions, short-run and long-term
performance of merger and acquisition activities of Taiwan IPO firms.
Implications on investigating the effects of the long-term performance for
newly listed firms that become subsequent bidder draw attention for investors
seeking global investment strategy. The results show that the performance of
IPO acquirers is significantly different from IPO non-acquirers measured in
abnormal returns and cumulative abnormal returns. Moreover, from the
cross-sectional regression analysis, IPO acquirers outperform non-acquires.
After controlling for the effect of different deal and firm characteristics,
the multiple regression results confirm the significant negative size effect,
leaving age, proceeds, market to book ratio insignificant. Overall, our results
regarding the takeover activity of IPOs helps explain IPO underperformance.