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Informational differences among institutional investors in an increasingly institutionalized market

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  • Chiao, Chaoshin
  • Chen, Shin-Hui
  • Hu, Jia-Ming
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    Abstract

    Studying the informativeness of institutional trades, this paper examines informational differences among institutional investors in the Taiwan stock market. Evidence shows that the net trades of (domestic) mutual funds impound information superior to the net trades of foreign investors and securities dealers, regardless of the selected formation and holding periods. The information advantage of mutual funds does not result from their trading persistence but from their stock-picking skill. The advantage is positively related to information asymmetry proxied by the smallness of firms, even after controlling for the risks associated with institutional equity preferences.

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    Bibliographic Info

    Article provided by Elsevier in its journal Japan and the World Economy.

    Volume (Year): 22 (2010)
    Issue (Month): 2 (March)
    Pages: 118-129

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    Handle: RePEc:eee:japwor:v:22:y:2010:i:2:p:118-129

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    Web page: http://www.elsevier.com/locate/inca/505557

    Related research

    Keywords: Institutional investors Trading persistence Information advantage;

    References

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    Cited by:
    1. Ding, Rong & Hou, Wenxuan & Kuo, Jing-Ming & Lee, Edward, 2013. "Fund ownership and stock price informativeness of Chinese listed firms," Journal of Multinational Financial Management, Elsevier, vol. 23(3), pages 166-185.
    2. Alexakis, Christos & Dasilas, Apostolos & Grose, Chris, 2013. "Asymmetric dynamic relations between stock prices and mutual fund units in Japan. An application of hidden cointegration technique," International Review of Financial Analysis, Elsevier, vol. 28(C), pages 1-8.
    3. Chien, Cheng-Yi & Lee, Hsiu-Chuan & Tai, Shih-Wen & Liao, Tzu-Hsiang, 2013. "Information, hedging demand, and institutional investors: Evidence from the Taiwan Futures Exchange," Journal of Multinational Financial Management, Elsevier, vol. 23(5), pages 394-414.

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