Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5083029 | International Review of Economics & Finance | 2017 | 15 Pages |
Abstract
Taiwan's initial public offerings (IPOs) are primarily fixed-price methods, public subscription issues that only allow individual investors to participate. The Taiwan Stock Exchange discloses subscription demand information, after which individual investors request the highest subscription rate shares; this can lead to herding. The empirical results of this study showed that investors exhibit increased attraction toward IPOs with extremely high subscription demand. After identifying sample issues with herd features, herd behavior in Taiwan's IPO market was found to be consistent with the “winner's curse” theory. Additionally, investors overreacted to subscription demand in the short run, which leads to negative long-term returns.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Chao-Shi Wang, Hui-Wen Tang, Roger C.Y. Chen,