The Empirical Study on the Election Bull Run inTaiwan''s Stock Market: 1989-2004

• Main Authors: Shih-chieh Cho, 卓世傑
• Other Authors: Wen-jen Hsieh
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/27030764630582307176

碩士 === 國立成功大學 === 政治經濟學研究所專班 === 92 === Abstract 　　The prevailing rumor in Taiwan is that before each election time the government will intervene the stock market to pull-up the stock price, which practice is generally called the "election bull run." The main purpose of this study is to examine the existence of the election bull run. The study period is from December 1989 to March 2004, in which various central and local elections took place. The methodology is the "event study," which is the usual practice of the stock price volatility research. The data of Taiwan''s stock prices come from the data bank of the Taiwan Economic Journal. In event study, we presume that if the stock price is subjected to the influence of a certain event, there will be an inevitable creation of "abnormal returns." 　　Two major differences of this study from previous relevant elections and stock price studies, which are the adoption of "political business cycle" theory and an assumption of interactions between the ruling party and the voters in Taiwan''s stock market. Taiwan''s ruling party may use their ability to influence and manipulate the stock market in order to win the election. The intervention may take place during an "event period," in which the interactions between Taiwan''s ruling party and the voters are included. 　　These empirical results could be summarized into three parts: First, historically, Taiwan''s stock markets during various event periods are likely to generate positive abnormal returns. Particularly after 1998, election bull run happened in every election under our study. Second, in Taiwan, the central election displayed a more obvious election bull run phenomenon than the local elections. As for comparisons of the administrative officer elections versus people representative elections, and the single election versus combined elections, there are no significant differences in the election bull run. Third, to our surprise, the magnitudes of the positive abnormal returns are more significant after the change of ruling party. Hence the investors of Taiwan''s stock market should seriously take the election bull run into consideration.