Analyst’s Target Price Revision and Dealer’s Trading Behavior Analysis: Evidence from Taiwanese Stock Market

Tsung-Yu Hsieh, Tsai-Yin Lin (), Fangjhy Li and Yi-Ting Huang
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Tsung-Yu Hsieh: Department of Economics, Economics and Management College, Zhaoqing University, Duanzhou District, Zhaoqing 526061, China
Tsai-Yin Lin: Department of Finance, College of Management, National Kaohsiung University of Science and Technology, No.1, University Rd., Yanchao Dist., Kaohsiung City 82445, Taiwan
Fangjhy Li: Department of Finance, School of Finance, Hubei University of Economics, No. 8 Yangqiaohu Road, Jiang-Xia District, Wuhan 430205, China
Yi-Ting Huang: Department of Finance, College of Management, National Kaohsiung University of Science and Technology, No.1, University Rd., Yanchao Dist., Kaohsiung City 82445, Taiwan

Sustainability, 2023, vol. 15, issue 4, 1-9

Abstract: This work utilizes the Taiwanese data primarily focused on retailing investor behavior to examine whether Taiwanese brokerage analysts issue target price revisions, whether implicit information connotation exists and whether their own brokerages use the market reaction brought about by target price revisions to conduct conflict of interest operations. The event study is used to verify whether the above results exist. The empirical results show that analysts may publish information that includes investment recommendations, earnings forecasts, or price target forecasts. Whether investors with immediate and post-event media coverage revise their relevant investment strategies and avoid serious losses caused by this news is established. The research results show that the target price revision has implicit information content no matter the target price being revised. In addition, a conflict of interest between dealers’ trading behavior and analysts’ target price revisions exists. The major contribution of this work is to fill the research gaps concerning which retail investors are easily influenced by social media and herding behavior, as well as target price forecasting. The most efficient use of resources relates to the satisfaction of everyone’s interests on a fair basis, and thus greater contribution. The governance mechanism and check and balance function can help maximize the value of the company, not only by enhancing the competitiveness of the enterprise, but also by increasing the value of shareholders’ rights and interests and better fulfilling corporate social responsibility.

Keywords: target price revision; information content; conflicts of interest (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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