How do securities dealers trade in the Taiwan stock market? Evidence from the financial crisis of 2008

Yang, Sheng; Chen, Yu Fen; Lin, Fu Lai

doi:10.1504/ijmp.2013.055833

Cited by 1 publication

(2 citation statements)

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“…This shows that although the trading behaviors of both FIs and SDs are influenced by manipulation activities, the behaviors are motivated by different goals. SDs aim to stabilize the market, which is consistent with Hypothesis 2a and Yang et al (2013), who state that Taiwanese SDs operate as market makers. However, FIs collude with manipulators to exaggerate price fluctuations, which supports Hypothesis 2b but is inconsistent with the findings of Cai et al (2010) and Han et al (2015).…”

Section: Institutional Trading Surrounding Stock Price Manipulationsupporting

confidence: 83%

“…Taiwanese SDs have specific trading privileges, such as direct access to the stock exchange system and the ability to trade without using brokers, allowing them to take advantage of quick trading action and low transaction expenditures. Yang et al (2013) examine how Taiwanese SDs trade, particularly in the aftermath of the 2008 global financial crisis. Their findings show that Taiwanese SDs do indeed operate as market makers.…”

Section: Literature Reviewmentioning

confidence: 99%

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Are institutional investors colluding with manipulators?

Luu

2023

Financ Manag Account

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This paper examines the trading behavior of institutional investors in Taiwan before, during, and after a manipulation event and determines whether institutional investors benefit from their trading behavior during the period from the year 2000 to 2020. We find that stocks with a low turnover and small market capitalization are the main targets of price manipulators. In addition, the stock price of manipulated firms increases from the start date of the manipulation event, peaks at the end of the event, then falls after the event. Foreign institutions collude with manipulators to exaggerate stock prices for self‐benefit. In contrast, securities dealers counter the trading behavior of manipulators and act as market stabilizers, causing them to suffer losses. Moreover, foreign institutions earn higher returns on stocks of manipulated firms with a low turnover during and soon after manipulation; however, they earn a higher return on stocks of manipulated firms with a high turnover in the long run after manipulation.

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Section: Institutional Trading Surrounding Stock Price Manipulationsupporting

confidence: 83%

Section: Literature Reviewmentioning

confidence: 99%