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Contagion and competitive effects of plan confirmation of reorganization filings: Evidence from the Taiwan Stock Market

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  • Chi, Li-Chiu
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    Abstract

    This paper aims to examine the intra-industry effects of confirmation of a reorganization plan. Using unique Taiwanese data on announcements of reorganization confirmation, I find evidence that such announcements elicit positive stock price reactions for the announcing firms and negative stock price reactions for other firms within the same industry. Specifically, negative competitive effects dominate positive contagion effects for industry rivals in the context of the announcement of a reorganization confirmation. Moreover, a hybrid neuro-fuzzy model is constructed, where five industry- and firm-level inputs are considered, to investigate which rivals enhance their position and which do not. Results show that my model is consistent and stable, and is good at classifying both contagion- and competitive-effect candidates.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 26 (2009)
    Issue (Month): 2 (March)
    Pages: 364-369

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    Handle: RePEc:eee:ecmode:v:26:y:2009:i:2:p:364-369

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    Web page: http://www.elsevier.com/locate/inca/30411

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    Keywords: Contagion effect Competitive effect Confirmation of a reorganization plan Market reaction Hybrid neuro-fuzzy model;

    References

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    Cited by:
    1. Tseng-Chung Tang, 2010. "The information content of reorganization procedures: contagion or competitive effects?," Portuguese Economic Journal, Springer, vol. 9(2), pages 141-161, August.
    2. Liao, Jui-Jung & Shih, Ching-Hui & Chen, Tai-Feng & Hsu, Ming-Fu, 2014. "An ensemble-based model for two-class imbalanced financial problem," Economic Modelling, Elsevier, vol. 37(C), pages 175-183.

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