No abstract

No abstract

Understanding the impacts of transparency in capital markets is important for determining the trading mechanism and for evaluating market efficiency and market fairness. The recent reforms covering trade transparency on the Taiwan Stock Exchange give us an opportunity to address and examine the relevant arguments. Evidence from this study indicates that increasing trade transparency may create a more efficient market due to decreased effective spreads compared with before the event. Asymmetric information also declines after transparency is liberalized. However, the movement direction of the realized spread does not seem obvious or pronounced. The implication from our results is that the exact effects from trade transparency may be dependent on the stock market's structure itself. Keywords:Transparency; open limit order book; effective spread; realized spread; asymmetric information.Lee and Chung (1999) discussed opening limit order book. 5 The same methodology was used by Flood et al. (1999). • Chiou-Fa Lin

No abstract

Purpose The purpose of this paper is to examine the impact of post-trade transparency on price efficiency and price discovery. Design/methodology/approach The authors use an exogeneous change in market transparency in the Taiwan Stock Exchange that mandates the disclosure of unexecuted orders of the five best bid and ask prices after each trade, and conduct an event study analysis. Findings After the change, price efficiency enhances for both large and small firms, although the impact on stock prices is greater when the firm is larger. The authors also find that post-change trading reveals more private information for large firms but more public information for small firms. The findings support the view that transparency has a positive impact on market quality. Originality/value The paper adds to a large body of literature investigating the relationship between transparency and market behavior, especially the ongoing debate about whether trading transparency positively affects price dynamics. The findings also have important policy implications for the regulators.