Exploring cash refund capital reduction in Taiwan: Empirical insights from bull and bear markets

The paper explores the concept of cash refund capital reductions (CRCR) in the context of firms listed on the Taiwan Stock Exchange Corporation (TSEC) and GreTai Securities Market (GTSM). CRCR is a distinct and increasingly vital financial tool used by these firms. Taiwan stands alone in adopting CRCR, making it a challenge to establish both a theoretical framework and gather empirical evidence on this subject. In this study, we examined 205 CRCR announcements made between 2002 and 2022, delving into their impact on both bull and bear markets. Our investigation reveals that the market responses to CRCR announcements were more significant during bull markets compared to bear markets. Additionally, we delve into the crucial factors influencing market responses in these varying market conditions. The findings underscore the importance for firms announcing CRCR to carefully consider the prevailing market conditions.