The Impact of the New Revised Financial Accounting Standard No.10 on the Construction Industry
Date Issued
2009
Date
2009
Author(s)
Yen, Hsiu-Jung
Abstract
The event that whether the new revised Financial Accounting Standard No.10 should be brought into force on time on the first day of 2009 was a hotly debated issue by people from all walks of life. With a sample of 33 observations, this study uses event study method to examine stock market reactions toward the declaration made by Financial Supervisory Commission that the new revised Financial Accounting Standard No.10 would be brought into force on time and the proposal made by Economic Advisory Task Force of the Presidential Office that the new revised Financial Accounting Standard No.10 should be postponed. In addition, the relations between stock cumulative abnormal returns (CAR) and firm characteristics are also examined in this study.he study finds that the stock market reactions are significantly negatively related to the declaration made by Financial Supervisory Commission. However, the stock market reactions are significantly positively related to the proposal made by Economic Advisory Task Force of the Presidential Office.oreover, the regression results indicate: (1) When the Financial Supervisory Commission declared that the new revised Financial Accounting Standard No.10 would be brought into force on time, companies with higher inventory-to-asset ratio tend to have lower CAR. (2) When the Economic Advisory Task Force of the Presidential Office proposed that the new revised Financial Accounting Standard No.10 should be postponed, companies with lower inventory-conversion rate seem to have higher CAR; companies with higher inventory-to-asset rate tend to have higher CAR; companies with higher inventory turnover rate appear to have higher CAR.
Subjects
financial accounting standard No.10
event study
construction companies
inventory
cumulative abnormal returns
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