Long term equity investments of TSE & OTC Listed Company：Disposition Effect and Earnings Management
Date Issued
2005
Date
2005
Author(s)
Chuang, Chih-Hsiang
Abstract
This paper investigates the redemption and earnings management behavior of TSE & OTC listed companies in Taiwan. First we explore whether corporations hold their noncurrent stock equity losers too long and sell winners too soon. Second, we testify if corporations manage earnings by selecting the timing of stocks sales. Finally,wheather the equity investment selling inclination of companies will affect their stock prices is studied. The main findings are as following：
1. TSE & OTC listed companies in Taiwan show a significant preference to realize their long term stock equity winners rather than losers. And when considerd winning or losing accounting to accounting profit or loss, this preference is stronger.
2. Compared to first three seasons, Taiwan corporations do not sell winners or losers especially for forth season to manipulate the financial income of their annual reports.
3. Taiwan corporations show behaviors to manage their earnings for income smoothing purpose.
4. The inclination of companies to sell their profited long term equity investment is not welcomed by stock investors. Stock prices of both companies performing inclination to sell winners and companies existing disposition effect in long term equity investment underperformed those of compared companies.
Subjects
錯置效果
行為財務學
盈餘管理
損益平穩化
Disposition Effect
Behavior Finance
Earnings Management
Income Smoothing
Type
thesis
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