Translated Titles

The Effects of Cross-Strait Water Pollution Prevention and Control Regulations on the Stock Prices of Taiwan's Environment Related Industries


蔡璧徽(Tsai Bi Huei);林宣儒(Lin Syuan Ru)

Key Words

兩岸 ; 經濟 ; 環境產業 ; 企業社會責任 ; 市場模型 ; Cross-Strait ; Economy ; Environmental Industry ; Corporate Social Responsibility ; Market Model



Volume or Term/Year and Month of Publication

44卷1期(2020 / 12 / 01)

Page #

62 - 79

Content Language


Chinese Abstract


English Abstract

This study is to elucidate the impact of changes in water pollution prevention and control laws across the Taiwan Strait on the stock prices of Taiwan's environmental industries. The environmental industries include Taiwan's steel, plastic and cement industries in this study. This study collects the amendments to the Water Pollution Prevention and Control Act issued by Taiwan and China in 2015 and 2017, and analyzes the market reactions of Taiwan's steel, plastic and cement industries using the event study method. Also, this investigation explores whether there is a significant difference in abnormal returns of Taiwan's steel, plastics and cement industries caused by Taiwanese and Chinese water pollution related regulations using analysis of variance (ANOVA) and regression analysis. The results show that the revisions of Taiwan's water pollution prevention and control regulations cause negative abnormal returns to Taiwan's steel, plastics and cement industries. When Taiwan prohibits the discharge of sewage by bypassing the stream, the steel, cement and plastic industries have to improve equipment or modify production processes to comply with regulations, so operation costs and corporate responsibility tend to inevitably increase. Investors will therefore sell their holdings of Taiwan's steel, plastics and cement industries, causing significantly negative abnormal returns. In addition, the announcement of China's water pollution prevention and control regulations will cause positive abnormal returns to Taiwan's steel, plastics and cement industries. It implies that Chinese environmental protection laws cause an order-transfer effect and stimulate the investors to be optimistic about the prospects of Taiwan's steel, plastics, and cement industries, and therefore choose to buy stocks of these industries, prompting these companies to generate positive abnormal returns. Furthermore, the ANOVA results show the significant difference in abnormal returns caused by Taiwanese and Chinese water pollution prevention and control regulations. Particularly, gross profit growth is significantly and positively related to abnormal returns caused by Taiwan's and China's revisions of water pollution prevention and control regulations.

Topic Category 人文學 > 人文學綜合
基礎與應用科學 > 基礎與應用科學綜合
工程學 > 工程學綜合
社會科學 > 社會科學綜合
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