This study aimed to explore the impact of the financial restatements on the stock market in Taiwan. The financial restatements for research event, Using the event study methodology to examine the impact of financial restatements on stock price. In this study, using the market model to build the regression model, and in order to avoid the stock return volatility clustering, using the generalized autoregressive conditional het-eroscedasticity to estimate regression coefficients.
According to Richardson, Tuna, and Wu's (2002) empirical results, the market reaction will be different from the kinds of financial restatements. So the financial restatements are divided into the two parts for voluntary and mandatory. In order to explore the differences between Taiwan’s electronics industry and other industries, we divide all industry include the voluntary restatements and mandatory to electronics industry and non-electronics in-dustry.
The empirical results show that the firms, voluntary restatement, have negative abnormal returns in the short-tern. And the firms, mandatory restatement, have positive abnormal returns. And whether it is a voluntary restatement or mandatory restatement, the electronics and non-electronics industry is the existence of significant differences.
