The Impact of Water Pollution Announcement on Stock Returns in Taiwan Textile Industry

• Published in: Tu mu gong cheng yu jian zhu 2017-08, Vol.11 (8), p.780-788
• Main Authors: Bi-Huei Tsai, Mu Yun Huang
• Format: Article
• Language: English
• Subjects: 企业价值观; 公告; 台湾地区; 收益率; 氟化物; 水污染事件; 纺织行业; 股票
• ISSN: 1934-7359; 1934-7367
• DOI: 10.17265/1934-7359/2017.08.006

The soccer teams of the World Cup wear the jerseys manufactured by Taiwanese textile companies which are the contractors of such brand corporations as Nike and Adidas. Because Taiwanese textile companies suffer water pollution events, this study verifies the market reactions to the two announcements of water pollution events from 2014 to 2015. The two events are as follows： first, Greenpeace International enabled 38 scientists to announce the ban on fluoride in Madrid; second, Greenpeace International has detected fluoride residues from the water in remote mountainous areas of Europe and concluded that Taiwanese jerseys composed of fluoride pollute the rivers or snows. The findings of the research indicate that the announcement of the ban on fluoride induces negative abnormal returns because fluoride is the main materials for Taiwanese jerseys. Most importantly, the announcement of the water pollution in Europe from Taiwanese manufactured jerseys induces negative abnormal returns. Both of the two events enable the stock investors scared about the decrease of future profit and market share for Taiwanese textile corporations. Consequently, investors sell the stocks of these corporations, inducing the negative abnormal returns during the announcement of water pollution of Taiwanese jerseys. Water polluted issues are critical of firm values.