Volume 15, Number 2, December 2025
| Market Risk Reactions to Corporate Overseas Expansion amid Deglobalization
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Fu-Ming Lai 1, Wan-Rong Li 2, Kuang-Hsun Shih 1 and Yi-Hsien Wang 1*
Abstract
Amid the growing trend of deglobalization and escalating geopolitical risks, overseas manufacturing expansion has become a critical strategic decision that significantly shapes investor expectations and capital market risk valuations. Focusing on Taiwan Semiconductor Manufacturing Company, this study employs an event study approach combined with an asymmetric GARCH model. This study analyze the differential market reactions specifically regarding stock returns and volatility following the announcements of TSMC's new fabrication plants in the United States, Japan, and Germany. Conversely, the market reaction to the U.S. expansion was relatively conservative; as the investment scale increased, market volatility and associated risks rose significantly. Furthermore, consecutive expansions within a single host country did not consistently elevate market valuations, suggesting that investors prioritize the underlying costs, policy stability, and geopolitical risks inherent in specific host locations.
Keywords: Overseas Expansion, Geopolitical Risk, Semiconductor Industry
JEL Classification: C58,G14, F23
1 Doctorate Program in Intelligent Banking and Finance, CTBC Business School, Tainan, Taiwan.
2 Department of Banking and Finance, Chinese Culture University, Taipei, Taiwan
* ( E-mail: wang12@ctbc.edu.tw)