Institutional investors and the credibility of open market repurchases in illiquid markets: evidence from Taiwan

• Su-Yin Cheng ^[1] ; Han Hou ^[2]
  1. [1] Kainan University

     Kainan University

     Taoyuan District, Taiwán

     
  2. [2] University of Science and Technology

     University of Science and Technology

     Yemen

     
• Localización: Revista española de financiación y contabilidad, ISSN 0210-2412, Vol. 46, Nº 2, 2017, págs. 168-188
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen
  • español

    Este artículo examina el problema de las ventajas informativas observando el comportamiento en el mercado de los inversores institucionales extranjeros y locales durante todo el plazo de ejecución de las readquisiciones de mercado abierto (RMA) en Taiwán. Se ha creado un índice de credibilidad (prospectivo) para medir la señal falsa de las empresas de RMA. Observamos que los inversores institucionales extranjeros cuentan con una ventaja informativa respecto a los inversores institucionales locales. Estos inversores compran empresas con una credibilidad más alta, mientras que los inversores institucionales locales no son capaces de distinguir entre las señales falsas y las verdaderas, lo cual permite a los inversores institucionales extranjeros una práctica más sofisticada y una experiencia de inversión más especializada. Además, hemos notado que los inversores institucionales extranjeros conservan las empresas con alta credibilidad porque estas ofrecen unos excedentes de rentabilidad mayores que las empresas con baja credibilidad.

  • English

    This paper examines the issue of information advantages via observing the trading behaviour of foreign and domestic institutional investors during the entire execution periods of open market repurchases in Taiwan. A credibility index (foresighted) is constructed to measure the false signal of OMR firms. We find that foreign institutional investors possess an information advantage over domestic institutional investors. They buy companies with higher credibility, whereas domestic institutional investors cannot distinguish between true and false signals, signifying that foreign institutional investors are sophisticated and possess specialised investment experiences. In addition, we find that foreign institutional investors hold high-credibility firms because those firms are linked with higher excess returns than firms with lower credibility.

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