ABSTRACT
This chapter examines the effect of U.S-Taiwan trade conflict events and the US trade deficit news on Taiwanese export-oriented firms’ stock prices. A general U.S-Taiwan trade conflict event is an event which may produce a general impact on all the Taiwanese export-oriented firms. For example, the Reagan administration’s decision to withdraw duty-free privileges from Taiwan or its pressure on Taiwan to appreciate the new Taiwanese dollar against the US dollar would adversely affect all the Taiwanese export-oriented firms. A specific U.S-Taiwan trade conflict event is an event which will mainly affect one Taiwanese export-oriented industry. The trade deficit news effect in the second subperiod is stronger than that in either the first subperiod or the whole sample period, which is consistent with the assertion that market participants paid more attention to the trade deficit news in the second subperiod.
