The herding behaviour and announcement of insider transfer trading: A study in Taiwan

Published in: Investment Analysts Journal
Volume 46, issue 4, 2017 , pages: 249–262
DOI: 10.1080/10293523.2017.1316917
Author(s): Fu Shuen ShieDepartment of Finance, Taiwan, Chiao Yi ChangDepartment of Insurance and Finance, Taiwan


The present paper examines the influence of herding behaviour on the market response to insider transfer trades under different levels of ownership concentration. The results show that the three-day waiting period for executing insider transfer trades that is uniquely required in Taiwan makes investors hesitant to act immediately on this information in order to realise better returns after this three-day period. We found comparatively small negative abnormal returns on the day of the announcement and larger negative cumulative abnormal returns afterwards. Moreover, the financial industry, which has a higher level of ownership concentration, experienced larger negative accumulative abnormal returns under conditions of higher institutional sell herding

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