Abstract

*Jiro E. Jay, Shuo Chang wu and Jason Ying-Jeou

Statutory infectious diseases breakout not only affects people's health and lives, but also stagnates the economic growth. However, in order to prevent or strain infectious diseases, the prevalence of infectious diseases also provides the development opportunities of biotechnology corporations. The impact of substantial diseases to stock prices had been investigated in previous literature. The effect of the statutory infectious diseases outbreak on Taiwanese biotechnology stock price movements is examined in this paper by using an event study. After observing nearly 10 years of major statutory infectious diseases in Taiwan, sample events include ENTEROVIRUS 71 in 1998, DENGUE FEVER in 2002, SARS in 2003 and H1N1 in 2009. There are 39 observations and the event periods are 15 trading days following the first confirmed case respectively. The empirical results point out that there exists a significantly positive abnormal return of Taiwan's biotechnology industry because of the statutory infectious epidemic.