International Journal of Business and Economics Volume 24, No. 3 December, 2025

Effects of the EU Carbon Border Adjustment Mechanism on Abnormal Stock Returns in Taiwan

Wen-Chun Tsai

Department of Business Administration, Feng Chia University

Abstract

This study investigates the capital market reactions of Taiwan’s carbon-intensive industries to major CBAM-related policy developments. Using event study methodology, the research focuses on the cement and steel sectors—two key industries covered by the EU’s Carbon Border Adjustment Mechanism (CBAM) and Taiwan’s emerging carbon fee framework. Three policy events were selected: the announcement of the carbon fee draft regulation (December 1, 2023), the official carbon fee rate announcement (October 7, 2024), and the launch of the trial declaration phase (May 1, 2025). Abnormal returns (AR) and cumulative abnormal returns (CAR) were estimated using the market-adjusted model and tested for statistical significance. The results reveal significant industry-specific responses: the steel industry exhibited stronger negative reactions to rate announcements, while the cement industry showed positive responses during implementation. These findings highlight the importance of regulatory timing, content, and sectoral sensitivity in shaping investor behavior under climate-related policies. The study contributes to the literature on sustainability disclosure and financial market dynamics and offers implications for policymakers managing carbon transition risks.

Keywords：Carbon Border Adjustment Mechanism (CBAM), Event Study, Abnormal Returns, Carbon-Intensive Industries

JEL Classifications：G1, G14, G18

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