| Summary: | 碩士 === 國立交通大學 === 管理學院碩士在職專班經營管理組 === 94 === This research applies the event study approach to examine how declaration of earnings affects a company’s stock price. Stock prices of forty listed biotech companies in Taiwan in the 2003-2004 period are collected for analysis. The major findings are as follows:
1. When a company announces falling earnings, its stock price then significantly goes down, showing that stock prices are significantly affected by fundamental factors.
2. If a company reports growing earnings, its stock price then usually fails to positively respond. This may be because the actual earnings are still unable to meet the targets in their financial forecasts.
3. Compared to those in 2004, fluctuations in stock prices reacting to financial declaration in 2003 are relatively larger.
4. These phenomena can be explained investors’ bounded rationality and psychological factors.
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