Stock price volatility and overreaction in a political crisis: The effects of corporate governance and performance☆

Stock price volatility increases in times of political crisis. In examining the effects of corporate governance and performance on price volatility and the market's overreaction during the political crisis triggered by the controversial Taiwan presidential election of 2004, our results show that companies with better corporate governance or performance experience less price volatility and less increase in volatility during such a crisis. Furthermore, the results show that corporate performance and ownership structure have significant effects on the stock price overreaction.