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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
The Impact of Water Pollution Announcement on Stock Returns in Taiwan Textile Industry
Author(s)
Bi-Huei Tsai and Mu Yun Huang
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DOI:10.17265/1934-7359/2017.08.006
Affiliation(s)
Department of Management Science, Chiao Tung University, Hsinchu 300, Taiwan, R.O.C.
ABSTRACT
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.
KEYWORDS
Water pollution, environment, event study, Greenpeace International.
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