[Table of Contents]
ACKNOWLEDGEMENT．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． i
ABSTRACT．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． ii
LIST OF TABLES．．．．．．．．．．．．．．．．．．．．．．．．．．． ．．． v
LIST OF FIGURES．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． vi

1. INTRODUCTION．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．1
2. SFAS NO.35: ACCOUNTING FOR IMPAIRMENT OF ASSETS．．．．．．．．．．．．．．． 5
2.1 Introduction of SFAS No.35 6
2.1.1 Scope and Purpose 6
2.1.2 Definition 7
2.1.3 Indication of Impairment 8
2.1.4 Identifying an Asset That May Be Impaired 9
2.1.5 Impairment of Goodwill 10
2.1.6 Recognition of an Impairment Loss 10
2.1.7 Reversal of an Impairment Loss 11
2.1.8 Disclosure 13
2.2 Comparison between SFAS No.35 (Taiwan) and SFAS No.144 (US) and IAS 36 14
2.3 Effects of SFAS No.35 15
2.3.1 For Companies 15
2.3.2 For Investors 16
2.3.3 For the Authority 17
3. LITERATURE REVIEW．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．18
3.1 Positive or Negative Market Reaction 18
3.2 Interest Rate Factor 19
3.3 Industry Factor 20
3.4 Partition 21
4. METHODOLOGY AND HYPOTHESES．．．．．．．．．．．．．．．．．．．．．．．．． 24
4.1 Event Study Models 25
4.1.1 Market Model 25
4.1.2 Statistic Test of (S)AR and (S)CAR 27
4.2 Hypotheses 29
5. DATA AND SAMPLE．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．33
5.1 Data 33
5.2 Descriptive Statistics 35
6. EMPIRICAL RESULTS．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．39
6.1 Short-Term Market Reaction in Consideration of Partition 39
6.1.1 Partition: By Industry 41
6.1.2 Partition: By the 'Numbe' of Types of Written-Down Assets Recorded
by Each Firm 43
6.1.3 Partition: By the Frequency of Written-Down Announcements 44
6.1.4 Partition: By the Write-Down Amount 45
6.1.5 Partition: By the Type of Written-Down Asset 46
6.1.6 Partition: By the Timing of Write-Down Announcement 47
6.1.7 Summary of Partition Results 48
6.2 Short-Term Market Reaction in Consideration of Interest Rate and Industry
Factors 49
6.2.1 Industry Factor (Full Sample) 50
6.2.2 Interest Rate Factor (Full Sample) 51
6.2.3 Interest Rate Factor (Banking and Insurance Industry) 53
6.2.4 Model Comparison: Other Industries 55
6.2.5 Industry and Interest Factors Considered at the Same Time (Full Sample) 57
6.3 Near-Term Market Reaction 59
7. DISCUSSION．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 63
7.1 Short-Term Market Reaction: Positive or Negative? 63
7.2 Do the Industry and the Interest Rate Factors Enhance the Explanation
Capability of the Market Model? 66
7.3 Near-Term Market Reaction: Investor Over- or Under-Reaction? 68
8. CONCLUSION．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 70

APPENDIX A: Sample Companies (258 companies from 20 Industries)．．．．．．．． 72
APPENDIX B: Formulas of the t-Statistics for the Parametric Test and the
Non-Parametric Test．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 76

REFERENCE．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 78

[Table of Tables]
1 The Distribution of 258 Samples among Industries 34
2 Sample Selection Criteria and Descriptive Statistics of
Write-Downs 37
3 Parametric Test for Short-Term Market Reaction (Full Sample) 39
4 Non-parametric Test (Sign Test) for Short-Term Market Reaction
(Full Sample) 40
5 AR and CAR based on the Market Model with an Industry Factor
(Full Sample) 50
6 AR and CAR based on the Market Model with an Interest Rate
Factor (Full Sample) 52
7 Model Comparison (CAR) for the Banking and Insurance Industry 54
8 Model Comparison (Adjusted R2) for the Banking and Insurance
Industry 55
9 Model Comparison (CAR) for Other Industries: with Industry or
Interest Rate Factor 57
10 Model Comparison (CAR) When the Industry and Interest Factors
Are Considered at the Same Time 58
11 Correlation between Security Return and Other Factors 67

[Table of Figures]
1 The First Fiscal Quarter in which Write-Down Is Recorded 36
2 Short-Term (S)AR and (S)CAR Trend for the Full Sample 41
3 AR and CAR Trend under the Industry Partition 42
4 AR and CAR Trend under the Partition: The 'Number'of Types
of Written-Down Assets Recorded by Each Firm 44
5 AR and CAR Trend under the Partition: Repeated Announcement
(in Terms of Quarters) 45
6 AR and CAR Trend under the Partition: Write-Down Amount 46
7 AR and CAR Trend under the Partition: Type of Written-Down
Asset 47
8 AR and CAR Trend under the Partition: Timing of Write-Down
Announcement 48
9 AR and CAR Trend based on the Market Model with an Industry
Factor (Full Sample) 51
10 AR and CAR Trend based on the Market Model with an Interest
Rate Factor (Full Sample) 52
11 Trend of Commercial Paper Rate in the Sample Period 53
12 Model Comparison (AR and CAR Trend) for the Banking and
Insurance Industry 54
13 Model Comparison (AR and CAR Trend) When the Industry and
Interest Factors Are Considered at the Same Time 59
14 Near-Term CAR Trend under the Industry Partition for the
Full Sample (The Basic Model) 61
15 Near-Term CAR Trend under the Industry Partition for the
Full Sample (Control Variable: Industry Factor) 62