Why are the Performances of Business Groups Different? A Case Study of Formosa Plastics Group and Far Eastern Group


Yu-Wei Lan, Dan Lin, Lu Lin

Abstract


This study examines the difference in performances of two business groups, Formosa Plastics Group and Far Eastern Group, under the impact of financial tsunami (2007.10.29~2017.8.10). The aim of this study is to help investors understand the operating model of business groups and use the herding effect to enhance the trading performance in financial markets. The empirical evidence shows that for the Formosa Plastics Group, the news impact curve (based on EGARCH model) including the leading company is flatter when the news impact is less than zero (that is, negative news impact) than the news impact curve excluding the leading company. In contrast, the news impact curve of the Far Eastern Group is steeper when the leading company is included. Moreover, when the leading company is included as an endogeneous variable in the model as a filter for the program trading simulation, results show that investors can profit from the Formosa Plastics Group.

Keywords


Family business, EGARCH, Herd effect, Granger causality test, Symmetric trading.

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About this article

Title

Why are the Performances of Business Groups Different? A Case Study of Formosa Plastics Group and Far Eastern Group

Keywords

Family business, EGARCH, Herd effect, Granger causality test, Symmetric trading.

DOI

10.20448/journal.501.2017.42.106.120

Date

2017-11-16

Additional Links

Manuscript Submission

Journal

Asian Journal of Economics and Empirical Research
Vol 4, No 2 (2017) Page: 106-120

Print ISSN

2518-010X

Online ISSN

2409-2622

Statistics

122 Views | 71 Downloads

Citations

0

Authors & Affiliations

Yu-Wei Lan
Department of Banking and Finance, Takming University of Science and Technology
Taiwan, Republic of China

Dan Lin
Department of Banking and Finance, Takming University of Science and Technology
Taiwan, Republic of China

Lu Lin
Department of Public Finance and Taxation, Takming University of Science and Technology
Taiwan, Republic of China


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Asian Journal of Economics and Empirical Research

 Online ISSN: 2409-2622 | Print ISSN: 2518-010X

 

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