| Title: | Normative Stock Exchange and Speculative Activities: Critique and Empirical Verification |
| Number: | 01-04 |
| Author: | Amir Kia |
| Issue Date: | February 2001 |
| Abstract: | This study reviews Tag el-Din’s (1996) paper and raises the possibilities that his organizational models may create other kinds of inefficiency. Furthermore, using Canadian stock data I extended his study and found that excess speculative activities (bubbles) do not add any information to the stock markets. Consequently, according to our empirical evidence, in light of Tag el-Din’s view, to achieve an efficient and stable stock market a highly regulatory normative stock exchange is needed. In this regard this study proposes that the government ensures that the investors in the stock markets have comprehensive knowledge of the stock market mechanism and levies tax on short-term horizon investment. |
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