Stock Price Persistence or Reverse after Investor’s Herding Behavior: A Taiwan Empirical Study

[[abstract]]There are more personal investors than institutional investors in Taiwan's stock market, it will more easily to appear irrational behavioral, and that will affect investment decisions. Among the irrational behaviors, the herding influences the wider investors, and become more important. In this study, we use the herding index of Chang et al. (2000) and Christie and Huang (1995) to exam the herd phenomenon of Taiwan’s listed stock return in the period 1980 to 2010. The empirical results of this study found that the frequency of occurrence of the Taiwan stock market herd behavior is high, there is not a rational investment behavior, the herd phenomenon which rise above the herd phenomenon of falling. Kinetic phenomena herd phenomenon of rising stock markets after the occurrence, there is no significant consistent results. Short-term stock market decline occurred after the herd phenomenon has significant kinetic phenomenon and inversion phenomenon is not significant