Narrow Results

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.