The Impact of the Relaxation of Visits by Mainland China Tourists to Taiwan on Stock Returns and Financial Performance: The Case of Listed Tourism Industry Firms

Abstract

The purpose of this study is to examine the impact on listed tourism industry firms_x000D_ of the relaxation of the policy to allow Mainland China tourists to visit Taiwan_x000D_ directly for sightseeing from a financial viewpoint. First, before the implementation_x000D_ of the policy, this study applied the “event study method” to investigate the effects_x000D_ on the stock prices of the announcement of the open policy. The results indicate that,_x000D_ except for the Aviation industry, the announcement has given rise to significantly_x000D_ abnormal returns to tourism industry stocks, but there has only been a short-term_x000D_ effect lasting one or two days. Moreover, following the implementation of the policy,_x000D_ the study uses the T-test and Wilcoxon test to examine the differences in financial_x000D_ performance on the listed tourism industry firms. The results show that it is only for_x000D_ the category of Hotel and Amusement firms, one of the operating efficiency_x000D_ indicators, that the “Sales per employee” variable has significantly increased. Other_x000D_ indicators of financial performance have almost all significantly decreased. This_x000D_ implies that the open policy does not substantially improve the financial_x000D_ performance of listed tourism industry firms as we expected.