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Open AccessArticle

An Event Study Analysis of Political Events, Disasters, and Accidents for Chinese Tourists to Taiwan

by Chia-Lin Chang 1,2,3, Shu-Han Hsu 1 and Michael McAleer 3,4,5,6,7,*
1
Department of Applied Economics, National Chung Hsing University, Taichung 402, Taiwan
2
Department of Finance, National Chung Hsing University, Taichung 402, Taiwan
3
Department of Finance, Asia University, Taichung 41354, Taiwan
4
Discipline of Business Analytics, University of Sydney Business School, Sydney 2006, Australia
5
Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam, 3000 Rotterdam, The Netherlands
6
Department of Economic Analysis and ICAE, Complutense University of Madrid, 28040 Madrid, Spain
7
Institute of Advanced Sciences, Yokohama National University, Yokohama 240-8501, Japan
*
Author to whom correspondence should be addressed.
Sustainability 2018, 10(11), 4307; https://doi.org/10.3390/su10114307
Received: 23 October 2018 / Revised: 11 November 2018 / Accepted: 18 November 2018 / Published: 20 November 2018
The number of Chinese tourists visiting Taiwan has been closely related to the political relationship across the Taiwan Strait. The occurrence of political events and disasters or accidents have had, and will continue to have, a huge impact on the Taiwan tourism market. To date, there has been relatively little empirical research conducted on this issue. Tourists are characterized as being involved in one of three types of tourism: group tourism (group-type), individual tourism (individual-type), and medical cosmetology (medical-type). We use the fundamental equation in tourism finance to examine the correlation that exists between the rate of change in the number of tourists and the rate of return on tourism. Second, we use the event study method to observe whether the numbers of tourists have changed abnormally before and after the occurrence of major events on both sides of the Strait. Three different types of conditional variance models, namely, the Generalized Autoregressive Conditional Heteroscedasticity, GARCH (1,1), Glosten, Jagannathan and Runkle, GJR (1,1) and Exponential GARCH, EGARCH (1,1), are used to estimate the abnormal rate of change in the number of tourists. The empirical results concerning the major events affecting the changes in the numbers of tourists from China to Taiwan are economically significant, and confirm the types of tourists that are most likely to be affected by such major events. View Full-Text
Keywords: event study; abnormal rate of change; Chinese tourists; OLS; GARCH; GJR; EGARCH; tourism finance event study; abnormal rate of change; Chinese tourists; OLS; GARCH; GJR; EGARCH; tourism finance
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MDPI and ACS Style

Chang, C.-L.; Hsu, S.-H.; McAleer, M. An Event Study Analysis of Political Events, Disasters, and Accidents for Chinese Tourists to Taiwan. Sustainability 2018, 10, 4307.

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