Investment Preference and Strategies of Foreign Institutional Investors Across Different Industries in Taiwan
AbstractThis paper investigates the investment preference of foreign institutional investors across different industries in Taiwanese stock market. By employing the idea of Fama and French (1992) three-factor model with investment strategy, the investment preference is a function of beta value, company size, book-market ratio and investment strategy. Our empirical results find that foreign institutional investors in all five industries adopt momentum strategies in their investment preference. Next, in each industry, investment preference has a long-run equilibrium relationship with beta value, company size, book-market ratio, and investment strategy. Moreover, in the electronic, financial, and steel industries, foreign institutional investors' investment preference has corrective power in the short-run. Further, the results of the Granger causality test reveal that the investment preference has a uni-directional leading relationship with beta value in the financial and textile industries. While in case of the steel industry, investment preference and beta value have a bi-directional causal feedback relationship. Industries where company size leads investment preference include electronics, finance, and steel. Book-market ratio leads investment preference only in the textile industry. Generally speaking, in each industry, company size is among the predominant factors that foreign institutional investors take into account when making decisions. The influences of beta value and investment strategy on investment preference do not appear significant. That is, the investment strategy under consideration does not make a difference for investment preference.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal Review of Pacific Basin Financial Markets and Policies.
Volume (Year): 12 (2009)
Issue (Month): 04 ()
Contact details of provider:
Web page: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml
Find related papers by JEL classification:
- G1 - Financial Economics - - General Financial Markets
- G2 - Financial Economics - - Financial Institutions and Services
- G3 - Financial Economics - - Corporate Finance and Governance
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim).
If references are entirely missing, you can add them using this form.