IDEAS home Printed from https://ideas.repec.org/a/bla/irvfin/v4y2003i3-4p189-210.html
   My bibliography  Save this article

The Behavior and Performance of Foreign Investors in Emerging Equity Markets: Evidence from Taiwan

Author

Listed:
  • Anchor Y. Lin
  • Peggy E. Swanson

Abstract

This study investigates trading behavior and investment performance of foreign investors in 60 large‐size firms listed on the Taiwan Stock Exchange. Strong evidence is found that foreign investors employ momentum strategies of buying past winners and selling past losers and favor large‐size, high book‐to‐market, and high‐tech stocks, while no evidence is found that foreign investors herd on market consensus. Findings show that foreign investors are short‐term superior performers but long‐term inferior performers. The short‐term superior performance appears to be driven partially by price momentum of winners portfolios rather than by risk taking. After controlling for firm size, share turnover, and industry, foreigners' short‐term performance in large‐size, high‐turnover, and high‐tech stocks is better than it is in small‐size, low‐turnover, and non‐high‐tech stocks.

Suggested Citation

  • Anchor Y. Lin & Peggy E. Swanson, 2003. "The Behavior and Performance of Foreign Investors in Emerging Equity Markets: Evidence from Taiwan," International Review of Finance, International Review of Finance Ltd., vol. 4(3‐4), pages 189-210, September.
  • Handle: RePEc:bla:irvfin:v:4:y:2003:i:3-4:p:189-210
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1468-2443.2005.00046.x
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chin-Wen Huang, 2014. "Influence of External Factors on the Taiwan Stock Exchange," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 8(4), pages 109-120.
    2. Hao Fang & Yang-Cheng Lu & Hwey-Yun Yau, 2014. "The Effects of Stock Characteristics on the Direction and Extent of Herding by Foreign Institutional Investors in the Taiwan Stock Exchange," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(2S), pages 60-74, March.
    3. Liao, Li-Chuan & Chou, Ray Yeutien & Chiu, Banghan, 2013. "Anchoring effect on foreign institutional investors’ momentum trading behavior: Evidence from the Taiwan stock market," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 72-91.
    4. Lowe, Alpha, 2014. "The demand-side explanation for commonality in liquidity: The role of institutional ownership in the Taiwan Stock Exchange," Pacific-Basin Finance Journal, Elsevier, vol. 29(C), pages 59-85.
    5. Pegah Dehghani & Ros Zam Zam Sapian, 2014. "Sectoral herding behavior in the aftermarket of Malaysian IPOs," Venture Capital, Taylor & Francis Journals, vol. 16(3), pages 227-246, July.
    6. Zou, Liping & Tang, Tiantian & Li, Xiaoming, 2016. "The stock preferences of domestic versus foreign investors: Evidence from Qualified Foreign Institutional Investors (QFIIs) in China," Journal of Multinational Financial Management, Elsevier, vol. 37, pages 12-28.
    7. repec:eee:riibaf:v:42:y:2017:i:c:p:865-873 is not listed on IDEAS
    8. repec:eee:reveco:v:49:y:2017:i:c:p:353-369 is not listed on IDEAS
    9. Chong, Terence Tai-Leung & Liu, Xiaojin & Zhu, Chenqi, 2016. "What Explains Herd Behavior in the Chinese Stock Market?," MPRA Paper 72100, University Library of Munich, Germany.
    10. Lam, Keith S.K. & Qiao, Zhuo, 2015. "Herding and fundamental factors: The Hong Kong experience," Pacific-Basin Finance Journal, Elsevier, vol. 32(C), pages 160-188.
    11. Demirer, Riza & Kutan, Ali M. & Chen, Chun-Da, 2010. "Do investors herd in emerging stock markets?: Evidence from the Taiwanese market," Journal of Economic Behavior & Organization, Elsevier, vol. 76(2), pages 283-295, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:irvfin:v:4:y:2003:i:3-4:p:189-210. See general 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: (Wiley Content Delivery). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1369-412X .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.