Does National Culture Matter for Herding Behavior Among Stock Market Investors?*
Advances in Pacific Basin Business, Economics and Finance
ISBN: 978-1-83753-865-2, eISBN: 978-1-83753-864-5
Publication date: 4 April 2024
Abstract
In the stock market, herding behavior occurs when investors mimic the actions of others in their investment decisions. As a result, the market becomes inefficient and speculative bubbles form. This study aims to investigate the relationship between information, overconfidence, market sentiment, experience and national culture, and herding behavior among Malaysian investors. A total of 400 questionnaires are distributed to bank institutions' investors. The survey design based on cross-sectional data is analyzed using the Partial Least Squares Structural Equation Model. The results indicate that information, market sentiment, experience, and national culture are positively related to herding behavior, while overconfidence has no effect. With this, the government should strengthen regulations to prevent the dissemination of misleading information. Moreover, investors are encouraged to overcome narrow thinking by expanding their understanding of different cultures when making investment decisions.
Keywords
Citation
Yii, K.-J., Soh, Z.-H., Chia, L.-H., Shiang-Lin Jaslyn, K., Chong, L.-Y. and Fu, Z.-C. (2024), "Does National Culture Matter for Herding Behavior Among Stock Market Investors?
Publisher
:Emerald Publishing Limited
Copyright © 2024 Kwang-Jing Yii, Zi-Han Soh, Lin-Hui Chia, Khoo Shiang-Lin Jaslyn, Lok-Yew Chong and Zi-Chong Fu. Published under exclusive licence by Emerald Publishing Limited