Narrow Results

By utilizing vector error correction model (VECM) and EGARCH model, this article uses 5-minute intraday data to examine the interaction of return and volatility between Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) and the newly introduced TAIEX futures. VECM model shows that there exists bi-directional Granger causality between index spot and index futures markets, but spot market plays a more important role in price discovery. The results of impulse response function and information share indicate that most of the price discovery happens in index spot market. The evidence of EGRACH shows that the impacts of spot and futures innovations are asymmetrical, and the volatility spillovers between spot and futures markets are bi-directional. However, the information flow from spot to futures is stronger. These results suggest that the TAIEX spot market dominates the TAIEX futures market in terms of return and volatility.

This article uses daily data from July 21, 1998 to July 31, 2000 to examine the hedging effectiveness, price behavior, and lead-lag relationship of SGX MSCI Taiwan index futures and TAIFEX TAIEX futures. By applying the Bayesian approach using Gibbs sampler, we find that TAIFEX index futures has a better hedging performance. A variance ratio test reveals that mean reversion and negative correlation of returns exist in SGX index futures. Only TAIFEX TAIEX futures is cointegrated with TAIEX spot. The uni-directional Granger causality between the two futures markets and spot market are from SGX to TAIEX and from TAIEX to TAIFEX. In terms of price discovery, SGX MSCI Taiwan index futures play a more important role than TAIFEX TAIEX futures.

This paper examines the arbitrage opportunity existing between Taiwan stock index futures and spot markets with the consideration of transaction costs. Index-futures arbitrageurs only enter into the market if the deviation from the equilibrium relationship is sufficiently large to compensate for transaction costs, as well as risk and price premiums. Employing the 5-minute intraday data of Taiwan index futures contracts, this paper uses the threshold cointegration model to estimate the upper and lower thresholds within which arbitrage is not profitable and, hence, the mispricing errors do not adjust back to equilibrium in the central regime. Combining these thresholds with an error correction model (ECM), empirical results show that there exists bi-directional Granger–causality relationship between index futures and spot markets. However, once the long-run cointegrated equilibrium does not hold, re-establishment of the equilibrium situation mostly depends on price adjustment in the futures market.

In this paper we empirically examine the effects of 451 restricted share repurchase announcements in Taiwan. Their 3-day cumulative abnormal returns are all significantly positive for different purposes and Tobin's qs. However, there is no significant difference in abnormal returns for different repurchasing purposes. This indicates that mandating a purpose is not really an effective tool for limiting managerial choice. Moreover, when the related variables are controlled, the other empirical results we conducted indicate that, at least in Taiwan, the traditional signaling hypothesis and the free cash flow hypothesis can function simultaneously to explain the effects of the restricted repurchase announcements.

Taiwan's semiconductor industry has been prominent and ranks number four in the world. The vertical disintegration model of Taiwan's semiconductor is a very unique one among the integrated circuit industries around the world. The objective of this paper is to study the vertical disintegration management of Taiwan's semiconductor industries. A price model which there are both integrated (IDM) and unintegrated (IC foundry and IC fabless separated) firms was presented. A vertical disintegration model in which there is a Cournot–Nash equilibrium at both stages of production, upstream (IC design) and downstream (IC fabrication), has been proposed to explain analytically the market price changes subjected to vertical disintegration. It was suggested that the market price of the integrated circuit decreases if the numbers of IC fabless firms are more than half of the total IC firms and are more than the numbers of IC manufacturing firms. In addition, five non-price factors leading to the vertical disintegration of Taiwan's semiconductor industries have been proposed: (1) industrial localization and cluster, (2) fast changes of technology, (3) significant increase of development cost, (4) emergence of IC fabless, and (5) government support. By spinning off the equipment division which needs a high capital, the semiconductor company can actually make profits by concentrating more on the increasingly complex integrated circuit designs. The disintegrated foundry companies can provide advantages of more specialty, higher quality, lower cycle time and good cooperation relations for the IC fabless firms. The vertical disintegration of integrated circuits is expected to be the trend for future for semiconductor manufacturing. In addition, the future challenges and directions of Taiwan's semiconductor industries were also discussed.

This study examines the accuracy and bias associated with the analysts' earnings forecasts of Taiwanese firms. Using the forecast data of individual analysts over 1991–1997 from the I/B/E/S database, we find that analysts' forecasts of earnings are generally more accurate than the predictions of a naïve forecasting model. However, this superiority seems to be largely confined to shorter forecast horizons. We also find that the analysts' earnings forecasts of Taiwanese firms are optimistically biased and that the bias depends on the nature of the earnings news. In addition, analysts' forecasts appear to be more accurate for larger firms and the bias also decreases with firm size. We find some variation in forecast accuracy and bias across industries but the overall results are not driven by any specific time period.

In this paper, we study a sample of 179 corporate asset sales in Taiwan between 1993 and 2003. We find that corporate asset sales in Taiwan enhance parent firm value with cumulative abnormal returns of 1.7715% for the pre-announcement five-day period and 0.6086% for the two-day announcement window. This finding is consistent with the evidence discovered in both UK and US. We also examine whether asset-sale gains are positively related to managerial performance, private lender monitoring, the use of proceeds, the type of asset sales, the profitability of asset sales, and the relative size of asset sales. Our cross-sectional regression results indicate that all variables, except private debt monitoring and relative size, appear with their predicted signs, but not all of them are statistically significant. During longer event windows, we find that only managerial performance measured by Tobin's q and the use of asset-sale proceeds can explain the gains from corporate asset sales in Taiwan.

The purpose of this paper is to employ the Meta-Frontier Cost Function to compare the efficiencies of banks in China and Taiwan over the period 2003–2009. Different from previous literature using loans and securities as the output variables in evaluating banking efficiency, we propose two new variables: interest income on loans and nonperforming loans, to identify whether the banks are both cost and profit efficient and to control the quality of loans. Evidence is found that the average cost efficiency of China's banks leads the Taiwanese banks with a significant gap. Some policy implications are provided accordingly.

Among the economies in the Eastern coastal area of mainland China, Jiangsu has stood out in terms of its rapid and sustained economic growth since 2000. The province has done exceptionally well in terms of competitiveness indicators, catching up quickly with the leading Greater China economy of Taiwan. Such convergence has triggered much academic and policy interest in terms of understanding the driving factors that have enabled Jiangsu to catch up with Taiwan. In this context, this paper empirically analyzes the factors that have caused the convergence between the two economies from 2000 to 2011 by employing Geweke Causality analysis. By decomposing and examining the linear feedback between economic growth and vectors of variables capturing investments in infrastructure, human capital, science, technology and innovation activities, this paper confirms the important role played by those factors in the convergence between Jiangsu and Taiwan in recent years.

In comparing Taiwan’s presidential elections in 2012 and 2016, looking into the influence of the cross-Strait relationship is an important research topic. Analyses of the 2012 presidential election focusing on the cross-Strait relationship therefore serve as a useful reference for such a comparison. All comments on and analyses of the outcome of Taiwan’s 2012 presidential election point to the impact of the cross-Strait economic relationship. By drawing on economic statecraft theories, this paper explores the issue through analyzing post-election survey data. Our study shows that the concern with the impact of the negative development of the cross-Strait economic relationship on Taiwan’s economy had Ma Ying-jeou lost the election significantly influenced the decisions of those voters who were dissatisfied with President Ma’s performance during his first term and yet still voted for him in the election mainly because of Ma’s position on the cross-Strait relationship. They accounted for 5.75% of the total number of voters. Given that the winning margin in the 2012 presidential election was 5.97%, the decision made by the aforementioned voters could have changed the election result. It also shows that 73.7% of the cross-Strait relationship voters were cross-Strait economic voters. Our findings demonstrate that, although the cross-Strait relationship per se may not be the most crucial factor that determines the voting choice of the Taiwan people, it however proves the influence of the cross-Strait economic relationship over the election, hence the economicization of the cross-Strait relationship. By economicization, it is meant that the cross-Strait economic relationship appears to be a dominant issue in the cross-Strait relationship.

There exists a conventional stereotype about native Taiwanese elders that were born in and lived through the Japanese rule before 1945. On the one hand, some politicians and political commentators derogatorily call them the “Kominka generation,” reinforcing the image of this group of having strong affection for and even intense loyalty to the previous Japanese regime. On the other hand, although many researchers have pointed out this cohorts’ strong cultural ties to Han ethnicity — some even possessed nostalgic feelings toward China — in the colonial period, the researchers also emphasized the emergence of their strong sense of being Taiwanese when they suffered various political and cultural discrimination from the new Chinese dominant class after 1945. Therefore, both perspectives falsely imagine this cohort to be definitely identifying themselves as Taiwanese, rejecting Chinese identity, opposing the Kuomintang (KMT), and supporting the Democratic Progressive Party (DPP). This paper aims to challenge these stereotypes. By adopting the techniques of grounded theory, the paper shows rich diversity not only in this cohort’s perceptions toward the political parties but also in their identity patterns. Furthermore three themes are identified in these participants’ explanation for their political orientations: economic development, social stability and security, and the cultural hierarchy that gives the KMT elites higher symbolic values than native political elites.

While embracing trade policies that foster trade liberalization, Taiwan has clear protectionist policies covering its agricultural trade, which combine border measures with domestic support, and are closely modeled on the policies created by the European Union. The idea of multifunctionality of agriculture — and its link to trade policy — has created a normative framework whereby the agricultural markets have to be shielded in order for them to provide non-commodity attributes or public goods. This paper aims to explore the causal power of ideas (liberalization and multifunctionality) in the definition of Taiwan’s agricultural trade policy, by analyzing them from the perspective of historical institutionalism, and taking Taiwan as a case study. It is the institutionalization of the idea of multifunctionality that gives it an explanatory power toward understanding the ideational source of protectionism in agricultural trade.

Taiwan has experienced a number of party splits and attempted mergers since democratization. These have played a critical role in the development of the country’s party system. While a number of studies have looked at the emergence of Taiwan’s splinter parties, party mergers have not received academic attention. This study aims to systematically examine the process of party mergers and takeovers. We examine four cases of attempted mergers and takeovers. In each case, we focus the analysis around three core questions: (1) How should we best classify the actual outcomes? (2) How we can best explain the variation in outcomes? (3) How can we assess the success of merger/takeover attempts? Unlike earlier studies, we examine a variety of merger outcomes rather than just successful cases. In addition to mergers, we propose the terms negotiated takeovers and hostile takeovers. Our classification scheme is based on relative party power and the inter-party relationship. To explain the variation in outcome, we applied a framework stressing the interplay of contextual, inter-party and inner-party factors. We found key contextual variables were electoral results, relative party sizes and the electoral system. The most important inter-party variables were ideological proximity and inter-party trust following successful cooperation. Lastly, the inner-party balance of power was also critical, particularly, the strength of leaders with favorable attitudes toward the merger project. We assess the success and failure of merger/takeover attempts with reference to election results, post-merger party unity and whether the post-takeover relationship was cooperative.

This paper explores the factors that affect Taiwanese citizens’ resistance to closer relations with China. Elements in Taiwanese society have recently exhibited a strong sense of anxiety in the face of a rising China. Distinct from the past military confrontation between China and Taiwan, more recently, Taiwanese citizens have been subject to a strengthening of cross-Strait relations and interactions, which makes their rising resistance to China puzzling. To empirically and theoretically explain why Taiwanese are resistant to closer ties with the mainland, we discuss three potential sources: cultural alienation, democratic anxiety, and economic interest. We test the effects of these three attitudinal factors on Taiwanese resistance to Chinese tourists, students, and workers using the China Impact Survey 2012 data set. The findings suggest that democratic anxiety, economic interest, and cultural alienation are all strong predictors in accounting for the public’s resistance to Chinese tourists and students, while economic interest is the most powerful factor in Taiwanese attitudes toward policies regarding Chinese workers. The findings provide important policy implications for policy makers in dealing with cross-Strait relations.

Over the past three decades, Taiwan has been struggling to gain an advantage and develop its role in Asia. This island has strived to balance its asymmetric relationship with China by engaging in regional integration in Southeast Asia and beyond. In the 1990s, the Taiwan government initiated the first wave of its Go South Policy aimed at building links at business and government levels with that region. The institutional and social legacy of the Go South Policy contributed to the making of the New Southbound Policy (NSP) which was proposed toward the end of 2015. This paper will unpack Taiwan’s presence in Southeast Asia by highlighting the international socialization process of the NSP and Taiwan’s strategic interaction with the region. It consists of four sections: the first section introduces the concept of international socialization. The second section discusses the positioning of Taiwan’s previous Go South policies. Starting with the shift from a mentality of “Taiwanese Asia” (Taiwan de yazhou, 臺灣的亞洲) to one of “Asian Taiwan” (Yazhou de Taiwan, 亞洲的臺灣), it describes in detail how Taiwan’s successive southward engagement initiatives have blended into the international socialization processes in the region. The third section highlights the relationships the policy’s key actors and stakeholders, including transnational actors, are establishing with their counterparts in Southeast Asia and the new social linkages that are currently being promoted. This includes the activities of Taiwanese residents in Southeast Asia and Southeast Asian migrants in Taiwan. The paper concludes by summarizing Taiwan’s international socialization in Asia.

This paper implements a constructivist approach from the discipline of International Relations (IR) to investigate the interplay between international politics and cyberspace, and explains why the Taiwanese government has been relatively slow to exploit cyber warfare for national-defense purposes prior to 2016. While this paper acknowledges the technology determinist’s argument that new technology can set the direction of politics, developments in Taiwan have brought to our attention a different perspective, which is that politics can still shape the future direction and use of technology. This analysis enables us to understand, through the case of Taiwan, how politics trumps both technical decisions and the overall direction of technology. Looking closely at the case of Taiwan’s cybersecurity contributes to the broader IR literature concerning the effects of norms and identities, and extends policy analysis to the domain of cyberspace. It establishes a dialogue between the IR literature and Cybersecurity Studies, and reduces the knowledge gap in understanding Taiwan’s security policy.

Xi Jinping’s rise to power has heralded a new foreign policy that is more assertive and uncompromising toward China’s neighbors, the United States, and the rest of the world. This change presents challenges for the United States and Taiwan in particular which must be addressed with a sense of urgency due to Xi Jinping’s ambitious objectives and his firm grip on the levers of power which increase the likelihood that the Communist Party and government of China will seek to achieve them without delay.

This paper reviews changes to Chinese foreign policy in the Xi Jinping era and argues how the modernization of the People’s Liberation Army (PLA) over time has increased the threat to Taiwan, with concurrent risks for the United States. Taiwan and the US can address the challenge presented by China by strengthening their relationship to adapt to the new era under Xi Jinping’s leadership.

According to CIA (2018), China’s economy now stands at approximately US$12 trillion, second only to the United States (CIA [2018]. World fact book). Unlike in 1978, China’s economy today is dependent on access to globally sourced raw materials, and access to overseas consumer markets for its industrial and consumer goods. This dependency on overseas markets has increased China’s global presence and interests, driving the need to protect them. The Chinese Government’s now ample resources have been allocated to both hard and soft power means toward this purpose. The PLA has greatly benefitted from economic development and the expansion of the Chinese economy, transforming from a backward institution focused on private-sector moneymaking into the sharpest tool of China’s power and influence. Since Xi Jinping came to power in 2012, China’s foreign policy and strategy have undergone a dramatic shift away from Deng Xiaoping’s focus on increasing domestic productivity and avoiding potentially costly overseas entanglements. The confluence of accumulated national wealth, diplomatic, economic, and military power, and the will to use those levers of power, has dramatic implications for the United States and China’s neighbors. A more assertive China, confident in its wealth, power, and international status, is increasingly unafraid of overt competition with its neighbors and the United States, unwilling to back down or compromise in the face of disputes. This dynamic has resulted in a new paradigm in the Indo-Pacific region that is unlike previous challenges of the past 40 years.

The shift in China’s foreign policy and the PLA’s modernization threaten to challenge the credibility of US security assurances and alliances in the region, making the cultivation and strengthening of the US–Taiwan relationship, and the network of US bilateral alliances in the region an urgent imperative.

This paper investigates the increasing use of cyber coercion by the People’s Republic of China (PRC) among its core interests: Taiwan, Hong Kong, and the South China Sea. It argues that the PRC’s deployment of sophisticated attacks in the form of cyber coercion continues to be part of its geostrategic playbook to exert its influence and prosecute its wider interests as a rising power in the Indo-Pacific region. However, it observes that cyber coercion will be employed by the PRC in concert with all the other tools — diplomatic, economic, and the political — across the spectrum. The paper has two broad goals: first to unpack the trends or patterns in the PRC-sponsored cyber coercion by accentuating contextual and operational dimensions using Taiwan, Hong Kong, and the South China Sea as analytical case studies; second, to highlight the opportunities and limitations of using cyber coercion as an asymmetrical capability in the changing threat landscape. The paper concludes that the PRC’s cyber coercion is characterized by blurring the distinction on what constitutes compellence and deterrence. The boundaries are not clear cut, and to a certain degree both are even mutually reinforcing. The in-depth analysis of the case studies reveals the growing prominence of disinformation campaigns in close coordination with cyber operations (malware, phishing, and DDoS attack). This emboldens the PRC with a myriad of coercive strategies in shaping its external environment and realizing its ambition of national rejuvenation across Taiwan, Hong Kong, and the South China Sea.

After Japan occupied Taiwan from the Quin Dynasty in 1895, the Japanese government immediately held talks with Spain to delimit the sea boundary between Spain and Japanese Taiwan. According to the Convention between Japan and Spain in 1895, the sea boundary of both countries was in the middle of the navigable channel of Bashi. For it did not refer to the longitude and latitude, thus it resulted in confusion when the United States negotiated a peace treaty with Spain. What is the meaning of “in the middle of the navigable channel of Bashi?” In the Treaty of Paris between the United States and Spain in 1898, Spain ceded the Philippines archipelagoes to the south of 20^∘ North latitude to the United States. In fact, the Batanes Islands are located at 20–21^∘ North latitudes. Geographically, the Batanes Islands were not included in the Treaty of Paris. This paper will focus on the reasons why did not Spain cede the territory to the north of 20^∘ North latitude to the United States? And, it also discussed the problems of the legal status of the Batanes Islands and the rights of claim by Taiwan.

Based on the literature about the role of rising nationalism in recent world politics, this paper proposes a nationalism-oriented causal model to explain the voting choices of different social groups. With an interest-identity framework, this generic model is applied to Taiwan’s 2016 presidential election to examine whether and to what extent 11 causal mechanisms influence the voting choices of four groups defined by generation, class, and ethnicity. The findings not only reveal generational, class-based, and ethnic differences in Taiwanese voting behavior; they also show that the election was largely one of identity politics centered around the issues of national identity and democratic identification, making the “interest card” played by Beijing less effective in swaying voter choices. This explains why Beijing’s divide-and-conquer economic policy successfully divided Taiwanese voters but failed in the end to prevent the pro-independence candidate from winning the election. The findings also indicate that the economic concerns of voters promoted both their Taiwanese identity and support for Taiwan independence, while identification with Taiwan’s democracy contributed directly to the former and only indirectly to the latter. Overall, the model presents a more fine-grained analysis of nationalist politics and may be applied to the studies of other political behaviors involving nationalism.