Evaluating total operational value and associated risks of financial holding companies in Taiwan

Li-Hui Chen

doi:10.2298/YJOR1002275C

Authors

Li-Hui Chen Associate Professor of Departments of Business Administration, College of Management and Director of Accounting Office in Shu-Te University, Taiwan, R.O. China

DOI:

https://doi.org/10.2298/YJOR1002275C

Keywords:

financial holding companies, whole operational value, financial risk, value at risk, value-risk relation model

Abstract

This study comprises several different parts. The first part applies a normal benchmark valuation model established by Penman to assess the potential whole operational values of FHCs. The second part applies the concept of measuring financial risk as earnings variance to establish a financial risk measurement model. This model can be used to examine the degrees of financial risk before and after FHC’s establishment, and to distinguish different combinations of FHC based on risk diversion efficiency. The final part of this research constructs a new value-risk relation model that can be applied to cross-analysis for measuring total operation value of FHCs with different degrees of financial risk. Through completion of the above steps this study will demonstrate what combination of FHC offers the co-benefits of risk diversion and high whole operational value.

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Evaluating total operational value and associated risks of financial holding companies in Taiwan

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