The influence of U.S. FED’s interest rate-raising event announcements on the abnormal returns in the Taiwan stock market

Abstract

This study examines the influence of U.S. FED’s interest rate-raising event announcements on the abnormal returns in the Taiwan stock market. The empirical results verified that, when the U.S. FED announced the interest rate decreasing, before the event announced, both the high-tech industries and traditional industries would have the opportunity to obtain significantly negative accumulated abnormal returns (CAR), after the event announced, high-tech industries still have the opportunity to obtain the significantly negative accumulated abnormal returns, while traditional industries just have the opportunity to obtain the significantly positive accumulated abnormal returns on the third day after the announcement. Whereas, when the U.S. FED announced the interest rate increasing, traditional industries have more opportunity than high-tech industries to obtain significantly positive accumulated abnormal returns. The empirical results provide references for investing decisions to the investors.