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Shareholder wealth effects of corporate fraud: Evidence from Taiwan’s securities investor and futures trader protection act

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  • Lin, Hsien-Ping
  • Walker, M. Mark
  • Wang, Yung-Jang

Abstract

We examine the shareholder wealth effects of Taiwanese firms accused of corporate fraud, and we find evidence that shareholders benefited from the passage of Taiwan’s Securities Investor and Futures Trader Protection Act. We not only examine the shareholder wealth effects at different stages of the corporate fraud violation cycle, but we also find evidence of a filing effect and an industry spillover effect. We conclude that shareholders can benefit from external monitoring of the firm’s managers, particularly in cases when firms operate in environments with weaker internal governance mechanisms.

Suggested Citation

  • Lin, Hsien-Ping & Walker, M. Mark & Wang, Yung-Jang, 2020. "Shareholder wealth effects of corporate fraud: Evidence from Taiwan’s securities investor and futures trader protection act," International Review of Economics & Finance, Elsevier, vol. 65(C), pages 222-243.
    • Handle: RePEc:eee:reveco:v:65:y:2020:i:c:p:222-243
    DOI: 10.1016/j.iref.2019.09.010
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    More about this item

    Keywords

    Corporate fraud; Securities violations; Investor protection; Shareholders’ wealth;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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