Pub Date : 2026-03-01Epub Date: 2026-02-14DOI: 10.1016/j.pacfin.2026.103091
Yanan Li , Yunhui Shi , Yezhou Sha
We employ a staggered DID model to estimate the effect of the short selling policy on the probability of informed trading. Using data and stepwise ease of short selling ban from China's A-share listed stocks during 2006–2022, we find that short selling policy reduces the probability of informed trading. To explore underlying mechanisms, we adopt a social network perspective, focusing on structural holes and centrality in interlocking directorate networks. The results indicate interlocking directorate networks positively mediate the relationship between short selling and the probability of informed trading. We further find the suppressive impact of short selling on the probability of informed trading is stronger under higher separation of ownership and control, ownership concentration, institutional ownership, and market attention. We recommend regulators consider interlocking directorate network characteristics and corporate features when developing regulatory strategies.
{"title":"Short selling and the probability of informed trading: Insights from interlocking directorate networks","authors":"Yanan Li , Yunhui Shi , Yezhou Sha","doi":"10.1016/j.pacfin.2026.103091","DOIUrl":"10.1016/j.pacfin.2026.103091","url":null,"abstract":"<div><div>We employ a staggered DID model to estimate the effect of the short selling policy on the probability of informed trading. Using data and stepwise ease of short selling ban from China's A-share listed stocks during 2006–2022, we find that short selling policy reduces the probability of informed trading. To explore underlying mechanisms, we adopt a social network perspective, focusing on structural holes and centrality in interlocking directorate networks. The results indicate interlocking directorate networks positively mediate the relationship between short selling and the probability of informed trading. We further find the suppressive impact of short selling on the probability of informed trading is stronger under higher separation of ownership and control, ownership concentration, institutional ownership, and market attention. We recommend regulators consider interlocking directorate network characteristics and corporate features when developing regulatory strategies.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103091"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147400359","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-01DOI: 10.1016/j.pacfin.2026.103096
Robert W. Faff
This Editorial Note takes a firm position on the problem of research bandwagons in finance scholarship. In several topical domains—including green finance, climate and carbon-related finance, sustainability, ESG, CSR, and DEI—the field has reached peak saturation, with large volumes of increasingly incremental studies generating diminishing marginal contribution. The Editorial argues that such outcomes is a systemic problem rather than individual failures and require clear journal-level leadership. Grounded in Responsible Science, this editorial note clarifies how the Pacific-Basin Finance Journal evaluates contribution beyond topical relevance and signals that submissions in crowded bandwagon areas face a very high risk of desk rejection absent exceptional differentiation and meaningful impact. The Editorial further positions journal-level pre-registration as a practical antidote to bandwagon incentives, helping restore balance, independence, and long-term credibility in finance research.
{"title":"PBFJ editorial responsible science, research balance, and the problem of bandwagons","authors":"Robert W. Faff","doi":"10.1016/j.pacfin.2026.103096","DOIUrl":"10.1016/j.pacfin.2026.103096","url":null,"abstract":"<div><div>This Editorial Note takes a firm position on the problem of research bandwagons in finance scholarship. In several topical domains—including green finance, climate and carbon-related finance, sustainability, ESG, CSR, and DEI—the field has reached peak saturation, with large volumes of increasingly incremental studies generating diminishing marginal contribution. The Editorial argues that such outcomes is a systemic problem rather than individual failures and require clear journal-level leadership. Grounded in Responsible Science, this editorial note clarifies how the <em>Pacific-Basin Finance Journal</em> evaluates contribution beyond topical relevance and signals that submissions in crowded bandwagon areas face a very high risk of desk rejection absent exceptional differentiation and meaningful impact. The Editorial further positions journal-level pre-registration as a practical antidote to bandwagon incentives, helping restore balance, independence, and long-term credibility in finance research.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103096"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147400364","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-23DOI: 10.1016/j.pacfin.2026.103073
Yapeng Zhao , Yuyan Tan , Xuelei Hou
This study examines the impact of the establishment of financial courts in China on the capital return rate of small and medium-sized enterprises (SMEs), focusing on the underlying mechanisms driving this effect. The findings reveal that financial courts significantly enhance SMEs' capital return rate by approximately 21.2%, primarily through two channels: first, by optimizing credit resource allocation, reducing the crowding-out effect of Local Government Financing Vehicles (LGFVs) on SMEs' credit, and second, by improving the business environment, reducing transaction costs, and increasing market confidence through more efficient financial dispute resolution. The heterogeneity analysis demonstrates that non-state-owned, low-collateral, and capital-intensive SMEs experience more substantial improvements in capital returns following the introduction of financial courts. This paper provides empirical evidence supporting China's financial judicial reform and offers critical insights for the optimization of global financial systems, highlighting the vital role of judicial specialization in enhancing the financing environment and capital efficiency for SMEs.
{"title":"Judicial specialization and SME capital efficiency: The role of financial courts reform","authors":"Yapeng Zhao , Yuyan Tan , Xuelei Hou","doi":"10.1016/j.pacfin.2026.103073","DOIUrl":"10.1016/j.pacfin.2026.103073","url":null,"abstract":"<div><div>This study examines the impact of the establishment of financial courts in China on the capital return rate of small and medium-sized enterprises (SMEs), focusing on the underlying mechanisms driving this effect. The findings reveal that financial courts significantly enhance SMEs' capital return rate by approximately 21.2%, primarily through two channels: first, by optimizing credit resource allocation, reducing the crowding-out effect of Local Government Financing Vehicles (LGFVs) on SMEs' credit, and second, by improving the business environment, reducing transaction costs, and increasing market confidence through more efficient financial dispute resolution. The heterogeneity analysis demonstrates that non-state-owned, low-collateral, and capital-intensive SMEs experience more substantial improvements in capital returns following the introduction of financial courts. This paper provides empirical evidence supporting China's financial judicial reform and offers critical insights for the optimization of global financial systems, highlighting the vital role of judicial specialization in enhancing the financing environment and capital efficiency for SMEs.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103073"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146057584","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-21DOI: 10.1016/j.pacfin.2026.103117
Cheng Liu , Siyuan Dong , Xinyi Gao
As a new governance mechanism, vertical cross-shareholding (VCS) can promote information sharing and coordination between upstream and downstream firms in the supply chain. In this study, we investigate the impact of VCS on the dynamic adjustment of corporate capital structure. Based on the data of Chinese A-share listed firms from 2010 to 2022, we find that VCS can accelerate the adjustment of corporate capital structure, especially for under-leveraged firms, while the effect of VCS on the adjustment of capital structure is relatively weak for over-leveraged firms. The mechanism analysis shows that VCS can accelerate the adjustment of corporate capital structure through the following three channels: supply chain information sharing, optimization of corporate governance structure and synergic utilization of financial resources. Moreover, the effect of VCS is stronger in state-owned enterprises, in regions with stronger regulatory environment and for firms with higher relational embeddedness. An additional analysis shows that VCS can help reduce the deviation of target capital structure for firms with extreme leverage ratio, either too high or too low, which also shows that VCS has a corrective effect on the capital structure. This study provides evidence for the strategic significance of VCS in improving the flexibility of corporate capital structure and reducing financial risks in emerging markets.
{"title":"Vertical cross-shareholding and dynamic capital structure adjustment","authors":"Cheng Liu , Siyuan Dong , Xinyi Gao","doi":"10.1016/j.pacfin.2026.103117","DOIUrl":"10.1016/j.pacfin.2026.103117","url":null,"abstract":"<div><div>As a new governance mechanism, vertical cross-shareholding (VCS) can promote information sharing and coordination between upstream and downstream firms in the supply chain. In this study, we investigate the impact of VCS on the dynamic adjustment of corporate capital structure. Based on the data of Chinese A-share listed firms from 2010 to 2022, we find that VCS can accelerate the adjustment of corporate capital structure, especially for under-leveraged firms, while the effect of VCS on the adjustment of capital structure is relatively weak for over-leveraged firms. The mechanism analysis shows that VCS can accelerate the adjustment of corporate capital structure through the following three channels: supply chain information sharing, optimization of corporate governance structure and synergic utilization of financial resources. Moreover, the effect of VCS is stronger in state-owned enterprises, in regions with stronger regulatory environment and for firms with higher relational embeddedness. An additional analysis shows that VCS can help reduce the deviation of target capital structure for firms with extreme leverage ratio, either too high or too low, which also shows that VCS has a corrective effect on the capital structure. This study provides evidence for the strategic significance of VCS in improving the flexibility of corporate capital structure and reducing financial risks in emerging markets.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103117"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147399931","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-04DOI: 10.1016/j.pacfin.2026.103092
Seohyun Lee
This paper proposes a measure for firm-level uncertainty using forecast disagreement among financial analysts in South Korea for the period between 2003Q1 and 2019Q4. I find that, at the aggregate level, the disagreement measure of uncertainty is positively correlated with the Economic Policy Uncertainty (EPU) and negatively correlated with GDP growth, both with lags. To investigate the real option channel of uncertainty, the impact of firm-level uncertainty on investment is estimated, controlling for firm-level first-moment shocks and financial conditions. The results suggest that the firm-level disagreement measure of uncertainty adversely affects investment and such effects are more severe for firms with high levels of irreversible investments. There is empirical evidence suggesting that the impacts on other real activities are consistent with the real option theory — sales, employment, and investment in R&D are discouraged by uncertainty shocks. Financial decisions of firms are affected by firm-level uncertainty shocks — firms reduce debt and increase payout when faced with higher uncertainty.
{"title":"Forecast disagreement about firm-level profitability and uncertainty","authors":"Seohyun Lee","doi":"10.1016/j.pacfin.2026.103092","DOIUrl":"10.1016/j.pacfin.2026.103092","url":null,"abstract":"<div><div>This paper proposes a measure for firm-level uncertainty using forecast disagreement among financial analysts in South Korea for the period between 2003Q1 and 2019Q4. I find that, at the aggregate level, the disagreement measure of uncertainty is positively correlated with the Economic Policy Uncertainty (EPU) and negatively correlated with GDP growth, both with lags. To investigate the real option channel of uncertainty, the impact of firm-level uncertainty on investment is estimated, controlling for firm-level first-moment shocks and financial conditions. The results suggest that the firm-level disagreement measure of uncertainty adversely affects investment and such effects are more severe for firms with high levels of irreversible investments. There is empirical evidence suggesting that the impacts on other real activities are consistent with the real option theory — sales, employment, and investment in R&D are discouraged by uncertainty shocks. Financial decisions of firms are affected by firm-level uncertainty shocks — firms reduce debt and increase payout when faced with higher uncertainty.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103092"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146190847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines whether and how ESG ratings influence stock price crash risk using panel data of China's A-share listed companies from 2010 to 2021. The results show that higher ESG ratings are significantly associated with lower stock price crash risk. Mechanism analysis suggests that ESG ratings reduce crash risk by curbing institutional investor herding, particularly sell-side herding. Furthermore, network media attention strengthens the mitigating effect of ESG ratings, while print media attention plays a comparatively weaker role. Heterogeneity analyses reveal that the inhibitory effect of ESG ratings on crash risk is more pronounced among non-SOE firms, small firms, non-overconfident managers, and companies in the manufacturing sector. These findings remain robust after addressing potential endogeneity and conducting a series of robustness checks.
{"title":"ESG ratings and stock price crash risk: Role of herding behavior and network media attention","authors":"Xinle Tong , Xinyue Lyu , Jingyu Jin , Huabin Bian","doi":"10.1016/j.pacfin.2026.103114","DOIUrl":"10.1016/j.pacfin.2026.103114","url":null,"abstract":"<div><div>This paper examines whether and how ESG ratings influence stock price crash risk using panel data of China's A-share listed companies from 2010 to 2021. The results show that higher ESG ratings are significantly associated with lower stock price crash risk. Mechanism analysis suggests that ESG ratings reduce crash risk by curbing institutional investor herding, particularly sell-side herding. Furthermore, network media attention strengthens the mitigating effect of ESG ratings, while print media attention plays a comparatively weaker role. Heterogeneity analyses reveal that the inhibitory effect of ESG ratings on crash risk is more pronounced among non-SOE firms, small firms, non-overconfident managers, and companies in the manufacturing sector. These findings remain robust after addressing potential endogeneity and conducting a series of robustness checks.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103114"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147400355","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-12DOI: 10.1016/j.pacfin.2026.103112
Xiaojing Chen , Wen Liu , Geng Chen , Xujian Wang , Yun Zhang
As the core technology driving a new round of scientific and industrial transformation, artificial intelligence (AI) plays a pivotal role in China's strategy for advancing high-quality development, particularly in how it integrates with micro-level enterprises. Using data from Chinese A-share listed firms from 2010 to 2023, this paper examines the impact of AI on corporate resilience at the firm level. Corporate resilience is measured across four dimensions: innovation capacity, resistance capacity, recovery capacity, and financing stability. We further explore the mechanisms through which AI affects resilience. The findings reveal that AI significantly enhances corporate resilience, this conclusion remains robust after a series of alternative measurements, high-dimensional fixed-effects models, and endogeneity checks. Mechanism analysis shows that improving resource allocation efficiency, strengthening risk management, and fostering continuous innovation are three primary channels through which AI contributes to resilience. Heterogeneity analysis indicates that the positive effect of AI is more pronounced among labor-intensive firms, non-internationalized firms, firms facing higher environmental uncertainty, and industries characterized by intense competition as well as greater financing constraints. Therefore, guiding the strategic direction of AI and promoting its localized application can play a crucial role in enhancing corporate resilience.
{"title":"Can artificial intelligence enhance corporate resilience? Empirical evidence from China's A-share listed firms","authors":"Xiaojing Chen , Wen Liu , Geng Chen , Xujian Wang , Yun Zhang","doi":"10.1016/j.pacfin.2026.103112","DOIUrl":"10.1016/j.pacfin.2026.103112","url":null,"abstract":"<div><div>As the core technology driving a new round of scientific and industrial transformation, artificial intelligence (AI) plays a pivotal role in China's strategy for advancing high-quality development, particularly in how it integrates with micro-level enterprises. Using data from Chinese A-share listed firms from 2010 to 2023, this paper examines the impact of AI on corporate resilience at the firm level. Corporate resilience is measured across four dimensions: innovation capacity, resistance capacity, recovery capacity, and financing stability. We further explore the mechanisms through which AI affects resilience. The findings reveal that AI significantly enhances corporate resilience, this conclusion remains robust after a series of alternative measurements, high-dimensional fixed-effects models, and endogeneity checks. Mechanism analysis shows that improving resource allocation efficiency, strengthening risk management, and fostering continuous innovation are three primary channels through which AI contributes to resilience. Heterogeneity analysis indicates that the positive effect of AI is more pronounced among labor-intensive firms, non-internationalized firms, firms facing higher environmental uncertainty, and industries characterized by intense competition as well as greater financing constraints. Therefore, guiding the strategic direction of AI and promoting its localized application can play a crucial role in enhancing corporate resilience.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103112"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147400360","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-28DOI: 10.1016/j.pacfin.2026.103080
Min-Rui Choo , Wei-Che Tsai , Hsiu-Chuan Lee , Chung-Jen Yang
This study investigates whether U.S. investor attention can predict Taiwan's stock index futures returns and enhance exchange-traded fund (ETF) investment performance. Investor attention measures are constructed from 52-week high and low prices, and forecasting models are developed by integrating the elastic net () with factor-based dimensionality reduction techniques to improve out-of-sample predictive accuracy. The empirical results show that the U.S. investor attention variables individually exhibit significant predictive power for Taiwan's stock index futures returns. Moreover, combined with factor-based dimensionality reduction models provide the most robust forecasting gains, outperforming not only the buy-and-hold and historical average benchmarks, but also models based solely on individual predictors and conventional dimensionality reduction approaches. Finally, the findings show that investors holding Taiwan-focused ETFs can enhance portfolio performance by dynamically adjusting their index futures positions in response to model-generated signals.
{"title":"Cross-market attention for futures forecasting and ETF performance enhancement","authors":"Min-Rui Choo , Wei-Che Tsai , Hsiu-Chuan Lee , Chung-Jen Yang","doi":"10.1016/j.pacfin.2026.103080","DOIUrl":"10.1016/j.pacfin.2026.103080","url":null,"abstract":"<div><div>This study investigates whether U.S. investor attention can predict Taiwan's stock index futures returns and enhance exchange-traded fund (ETF) investment performance. Investor attention measures are constructed from 52-week high and low prices, and forecasting models are developed by integrating the elastic net (<span><math><mi>ENet</mi></math></span>) with factor-based dimensionality reduction techniques to improve out-of-sample predictive accuracy. The empirical results show that the U.S. investor attention variables individually exhibit significant predictive power for Taiwan's stock index futures returns. Moreover, <span><math><mi>ENet</mi></math></span> combined with factor-based dimensionality reduction models provide the most robust forecasting gains, outperforming not only the buy-and-hold and historical average benchmarks, but also models based solely on individual predictors and conventional dimensionality reduction approaches. Finally, the findings show that investors holding Taiwan-focused ETFs can enhance portfolio performance by dynamically adjusting their index futures positions in response to model-generated signals.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103080"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146190928","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-02DOI: 10.1016/j.pacfin.2026.103098
Chen Song
This paper examines the effects of CEO hometown identity on corporate cash hoarding. We provide robust evidence that firms led by hometown CEOs tend to hoard significantly less cash. This effect is weaker in state-owned enterprises (SOEs) and firms with fierce competition, which may be attributed to the strong government intervention over SOEs and the external pressures of competitive markets. Further analysis reveals that CEO hometown identity reduces corporate cash hoarding by weakening both precautionary- and agency-driven motives. The findings suggest that CEO hometown identity serves as an effective informal corporate governance mechanism for corporate cash management. Our results remain robust across various robustness tests, including alternative proxies for corporate cash hoarding, the instrumental variables approach, the difference-in-differences method, the propensity score matching technique, the placebo test, and the Heckman two-step selection model.
{"title":"CEO hometown identity and cash hoarding","authors":"Chen Song","doi":"10.1016/j.pacfin.2026.103098","DOIUrl":"10.1016/j.pacfin.2026.103098","url":null,"abstract":"<div><div>This paper examines the effects of CEO hometown identity on corporate cash hoarding. We provide robust evidence that firms led by hometown CEOs tend to hoard significantly less cash. This effect is weaker in state-owned enterprises (SOEs) and firms with fierce competition, which may be attributed to the strong government intervention over SOEs and the external pressures of competitive markets. Further analysis reveals that CEO hometown identity reduces corporate cash hoarding by weakening both precautionary- and agency-driven motives. The findings suggest that CEO hometown identity serves as an effective informal corporate governance mechanism for corporate cash management. Our results remain robust across various robustness tests, including alternative proxies for corporate cash hoarding, the instrumental variables approach, the difference-in-differences method, the propensity score matching technique, the placebo test, and the Heckman two-step selection model.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103098"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146190930","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-27DOI: 10.1016/j.pacfin.2026.103077
Jianqiang Chen , Pei-Fang Hsieh , J. Jimmy Yang
This study examines potential spoofing tactics using complete intraday order and trade data from Taiwan's derivatives markets. We find that transaction prices rise (fall) after aggressive limit buy (sell) order revisions, accompanied by opposite-side order placements and trades, consistent with potential spoofing. After such order revisions, prices tend to reverse, market order imbalance decreases, and market quality deteriorates. Using a trading rule that restricts limit order placement as a quasi-natural experiment, we find that such restrictions reduce the price impact of spoofing orders and improve market quality. Potential spoofing tactics significantly affect prices, especially during market openings and closings, trading intervals with larger order revisions or wider bid-ask spreads, and particularly in out-of-the-money options.
{"title":"Order spoofing, price impact, and market quality","authors":"Jianqiang Chen , Pei-Fang Hsieh , J. Jimmy Yang","doi":"10.1016/j.pacfin.2026.103077","DOIUrl":"10.1016/j.pacfin.2026.103077","url":null,"abstract":"<div><div>This study examines potential spoofing tactics using complete intraday order and trade data from Taiwan's derivatives markets. We find that transaction prices rise (fall) after aggressive limit buy (sell) order revisions, accompanied by opposite-side order placements and trades, consistent with potential spoofing. After such order revisions, prices tend to reverse, market order imbalance decreases, and market quality deteriorates. Using a trading rule that restricts limit order placement as a quasi-natural experiment, we find that such restrictions reduce the price impact of spoofing orders and improve market quality. Potential spoofing tactics significantly affect prices, especially during market openings and closings, trading intervals with larger order revisions or wider bid-ask spreads, and particularly in out-of-the-money options.</div></div>","PeriodicalId":48074,"journal":{"name":"Pacific-Basin Finance Journal","volume":"97 ","pages":"Article 103077"},"PeriodicalIF":5.3,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146190927","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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