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MARKET REACTIONS TO THE PASSAGE OF THE FINANCIAL HOLDING COMPANY ACT IN TAIWAN
Author(s) -
Wang JaneSue,
Chen JingTwen,
Chou PinHuang
Publication year - 2008
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2008.00412.x
Subject(s) - legislature , economics , value (mathematics) , financial market , business , finance , broker dealer , financial system , monetary economics , archaeology , machine learning , computer science , history
. We examine how financial institutions react to various events surrounding the passage of Taiwan's Financial Holding Company Act in June 2001. Empirical results indicate that the financial system experiences significant abnormal returns along the legislative process. Smaller firms have significantly higher abnormal returns, thus lending no support for the hypothesis that larger firms benefit more from the Act. Further analysis shows that the significance of market value is replaced by a significant securities industry effect, thereby consistent with the observation that Taiwan's securities firms are generally smaller in market values and are potential target firms for financial holding companies.