Effects of Transparency on Herding Behavior: Evidence from the Taiwanese Stock Market

Kuei-Yuan Wang and Yu-Sin Huang

Emerging Markets Finance and Trade, 2020, vol. 55, issue 8, 1821-1840

Abstract: This study combines the concepts of information asymmetry from classical finance theory and herding behavior from modern behavioral finance theory to investigate whether herding behavior exists in the Taiwan stock market. Scores from the Information Disclosure and Transparency Ranking System (IDTRs) are incorporated into the nonlinear model proposed by Chang, Cheng, and Khorana (2000). The empirical results reveal that herding behavior is prevalent in the Taiwan stock market and the implementation of the IDTRs has effectively discouraged such behavior. In addition, the empirical results of this study reveal that the lower level of transparency, the more prevalent of herding behavior in the Taiwan stock market. The empirical results confirm the government’s efforts to increase the transparency of listed firms in order to reduce information asymmetry and prevent investors from engaging in herding behaviors.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/1540496X.2018.1504289 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:emfitr:v:55:y:2020:i:8:p:1821-1840

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MREE20

DOI: 10.1080/1540496X.2018.1504289

Access Statistics for this article

More articles in Emerging Markets Finance and Trade from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().