Effective? Fundamentals of Listed Stocks and Investors ’ Perception of Fair Price*

This study investigates the price limit performance and its difference from previous lit-erature with the analysis of fundamentals of listed stocks. In addition, we examine the influence of price limits on the perception of fair price to investors. The empirical results find that first, price limits lead significantly to less efficient price discovery for listed stocks with worse fundamentals. Second, the inconsistency of fair price perception and the degree of information asymmetry don’t decrease for stocks that hit price limits. Finally, we suggest an increase in daily upper limit for Taiwan Stock Exchange