TUTORIAL : ACADEMIC ESSAY WRITING [2]
论文作者:留学生论文论文属性:课程作业 Coursework登出时间:2010-11-29编辑:anterran点击率:9174
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关键词:TUTORIALwriteacademic essay
being that noise traders are “traders that trade on noise as if it were information” and information traders as traders with “information or insights about individual firms”. Ramiah and Davidson (2007) defined noise traders as mum and dad investors who trade in “absence of information ” and information traders as those who trade on the basis of information”. In their model Ramiah and Davidson (2007) assume that information traders do not necessarily trade to correct market inefficiencies caused by noise trading, rather they themselves are also inclined to error in their
www.51lunwen.orgtrading decisions and hence giving rise to over and under reaction.
DDSW (1990) demonstrates that noise traders create “noise trader risk” as noise trading can lead to a large divergence between market prices and fundamental values. DDSW (1990) and Sias , Starks, and Tinic (2001) have focused their studies in building a noise trader model focused on closed end funds. While, Osler (1998) has defined Noise Trader Risk through technical analysis. Ramiah and Davidson (2007) have created a model to measure Noise Trader Risk that can be applied in different markets (generalised model) based on the ideas from DSSW (1990 ) and Shefrin and Statman’s (1994) Behavioural Asset Pricing Model (BAPM).
To date the existing literature has focused studying markets such as Australia and America however there is no research available on the effects of noise traders on the Chinese stock market. Chen et al. (2004) found that Chinese individual investors tend to be overconfident, inclined toward a disposition effect, and exhibit representativeness bias. This overconfidence coupled with the Chinese well known love of gambling allows us to logically infer that overreaction is most likely prevalent in the China A share market. We also believe that Information pricing error is prevalent in the B share market due to foreign investor’s lack of knowledge and familiarity with respect to Chinese equities and the companies they are investing in. Also as stated by Rawsky (2002) China’s share markets suffer from official manipulation, insider dealing, and fraudulent reporting which will in turn have an effect on the decisions made by informed traders. Many academics have however researched the volatility and inefficiencies in the Chinese stock markets. Girardin and Liu (2003) noted that “eminent observers argue that the stock market looks like a casino (Wu JingLian)” this was also noted by Lim and Brooks (2009) in their paper which re-examines the efficiency of the A- and B-shares markets in Shanghai and Shenzhen Stock Exchanges (SHSE and SZSE) using a battery of nonlinearity tests and their research suggests that investors in the Chinese stock markets trade like noise traders and simply speculate. Ng and Wu (2006) also noted that the decisions made by Chinese investors are often not influenced by stock fundamentals that are related to a firm’s financial information or future prospects, instead they are more likely ‘driven by their emotions, acting as noise traders, and hence a stock’s fundamental financial information plays no role in their trading decision”. Yin-Hua and Tsun-Siou (2000) also looked at volatility in share prices and unexpected returns caused by market inefficiencies in Chinese markets concluding that the volatility of A shares is higher than the volatility of B shares in effected providing a form of inconclusive evidence of noise traders
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