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Publications

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TitleThe Impact of Presidential Elections on Taiwan’s Stock Market
作者Yi-shuan Chen ‧ Tsui-yueh Cho ‧ Shih-ting Pai
作者說明Associate Professor, Department of Insurance and Finance, National Taichung University of Scienceand Technology.
Associate Professor, Department of Insurance and Finance, National Taichung University of Science
and Technology (corresponding author).
Bachelor Student, Department of Insurance and Finance, National Taichung University of Science and
Technology.
AbstractWe use the event study approach to examine the impact of six direct presidential elections from 1996 to 2016 on the Taiwan stock market. Based on whether the pre-election polls show a significant winner or not, we separate all samples into expected and unexpected subsamples. We find a negative abnormal return during the pre-election windows and a positive abnormal return for the 30-day election period for the whole samples. However, the Cumulative Average Abnormal Returns (CAR) are not greater for the unexpected subsamples than they are for the expected subsamples, an outcome not consistent with the prediction of the Uncertain Information Hypothesis (UIH). Moreover, according to entrepreneurs’ support for a specific candidate before the election dates, we divide their shares into the “Kuomintang-party concept” and the “Democratic-Progressive-Partyconcept” stocks. We investigate the election effect on these two concept stocks, as well as on their subsidiary company shares. Moreover, we find that the expected-losing-party stocks have a smaller CAR during the preevent window but a greater CAR during the whole 30-day window than the expected-winning-party shares, as predicted by the UIH. These findings suggest that investors in the Taiwan stock market have a stronger reaction to bad news than to good news.
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