The Impact of the Financial MOU on the Stock Return of the Banking Industry
Date Issued
2011
Date
2011
Author(s)
Wu, Tung-Yu
Abstract
The economic cooperation across the Taiwan Strait affects the prospect of Taiwan economy greatly. The financial memorandum of understanding (MOU) signed by Taiwan and the Mainland China on November 2009 is an important agreement because it’s the first time for the government of China to allow Taiwan’s banking industry to operate in China. This paper uses event study to examine whether MOU would affect the cumulative abnormal returns (CAR) of banking securities listed on Taiwan Stock Exchange (TSE) and Over-the-Counter (OTC) market. The results are as follows: (1) During the window dates, sample companies had a significant positive CAR. (2) The relationship between CAR and sample companies’ ROA is positive. (3) The relationship between CAR and the number of representative offices established by the sample companies is positive. (4) Bank’s size has no significant relationship with CAR.
Subjects
Event Study
Cumulative Abnormal Returns
Representative Offices
Type
thesis
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