The Year-End Anomaly of Taiwanese Family-Controlled Groupings

Yin-Hua Yeh (), Pei-Gi Shu and Wen-Yi Huang
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Yin-Hua Yeh: Department of International Trade and Finance, Fu-Jen Catholic University, 242, Hsin-Chuang, Taipei, Taiwan, R.O.C.
Pei-Gi Shu: Department of Business Administration, Fu-Jen Catholic University, 242, Hsin-Chuang, Taipei, Taiwan, R.O.C.
Wen-Yi Huang: Graduate Institute of Finance, Fu-Jen Catholic University, 242, Hsin-Chuang, Taipei, Taiwan, R.O.C.

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2001, vol. 04, issue 02, 127-163

Abstract: The average abnormal return of Taiwanese family-controlled grouping (1.60 percent) is significantly higher than that of individually listed companies (0.03 percent) in December. Within the same family-controlled grouping, the average abnormal return in December is also higher than that of the rest of the months (-0.13 percent) in the sampling periods 1992 through 1997. We cautiously set five joint criteria to define the anomaly in December that pertains only to the family-controlled grouping. The empirical results supported our argument by which the ornamenting motive of the family-controlled grouping is to account for the anomaly. For illustration, we further identify company size, losses from currency translation and bad debt, cash flow, and the gain from selling long-term investment which can effectively contrast the willingness and capability of family-controlled grouping to engage in the year-end earning management.

Keywords: Anomaly; Earning management; Family control; Family-controlled grouping (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2001
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DOI: 10.1142/S0219091501000371

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