The Impact of Trading Mechanism Reforms on Behavioral Biases: Evidence from Taiwan Stock Market

Key Points

• Irrational trading behaviors decreased significantly after the reforms, enhancing market efficiency.
• Event studies indicated a notable change in stock performance, particularly in high volatility stocks, after the mechanism reforms.
• Analysis of trading data from Taiwan's stock market highlighted trends in behavioral biases that were altered by the new trading mechanisms.
• These findings suggest that modifying trading mechanisms can effectively combat irrationality in stock markets.