Search results

1 – 10 of over 3000
To view the access options for this content please click here
Article
Publication date: 6 September 2021

Muskan Sachdeva, Ritu Lehal, Sanjay Gupta and Aashish Garg

In recent years, significant research has focused on the question of whether severe market periods are accompanied by herding behavior. As herding behavior is a…

Abstract

Purpose

In recent years, significant research has focused on the question of whether severe market periods are accompanied by herding behavior. As herding behavior is a considerable cause of the speculative bubble and leads to stock market deviations from their basic values it is necessary to examine the motivators which led to herding behavior among investors. The paper aims to discuss this issue.

Design/methodology/approach

In this study, the authors performed a two-phase analysis to address the research questions of the study. In the first phase, for text analysis NVivo software was used to identify the factors driving herding behavior among Indian stock investors. The analysis of a text was performed using word frequency analysis. While in the second phase, the Fuzzy-AHP analysis techniques were employed to examine the relative importance of all the factors determined and assign priorities to the factors extracted.

Findings

Results of the study depicted Investor Cognitive Psychology (ICP), Market Information (MI), Stock Characteristics (SC) as the top-ranked factors driving herding behavior, while Socio-Economic Factors (SEF) emerged as the least important factor driving herding behavior.

Research limitations/implications

The current study was undertaken among stock investors from North India only. Moreover, numerous factors are not part of the study but might significantly influence the investors' herding behaviors.

Practical implications

Comprehending the influences of the different factors discussed in the study would enable stock investors to be more aware of their investment choices and not resort to herd behavior. This research enables decision-makers to understand the reasons for herd activity and helps them act accordingly to improve the stock market's performance.

Originality/value

The current study will provide an inclusive overview of herding behavior motivators among Indian stock investors. This study's results can be extremely useful for both academics and policymakers to gain some insight into the functioning of the Indian stock market.

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

Keywords

To view the access options for this content please click here
Book part
Publication date: 4 July 2019

Reyhan Can and Işın Dizdarlar

This study is concerned with markets operating in Turkey in the Istanbul Stock Exchange (BIST), which have been observed and studied in relation to herd behavior. During…

Abstract

This study is concerned with markets operating in Turkey in the Istanbul Stock Exchange (BIST), which have been observed and studied in relation to herd behavior. During the research part of the study, the existence of herd behavior was investigated with the help of the daily closing price data of the firms in BIST between January 2011 and December 2017. In the research section of the study, the authors used regression analysis. In the analysis, the authors used the index value of the BIST whole Index. The average value of the index value of BIST whole Index was taken. Then, according to this average, 1% percentile and 5% percentile were taken. In the periods in the 1% percentile (at the dates) the result was that herd behavior was present. The herd behavior was observed for the periods (for dates) included in the percentile of 1%. On the other hand, the results of the analysis for the 5% percentile show that the herd behavior is only seen in the upper extremes.

To view the access options for this content please click here
Book part
Publication date: 4 July 2019

Çağatay Başarir and Özer Yilmaz

Starting in the 1980s, financial liberalization and technological developments have enabled individual investors to participate in financial markets and carry out easy…

Abstract

Starting in the 1980s, financial liberalization and technological developments have enabled individual investors to participate in financial markets and carry out easy transactions. With these developments, academics began to wonder how the individual investors decide to invest and what factors affect these decisions.

According to traditional finance theory, it is suggested that markets are efficient and investors show rational behaviors in their financial purchasing decisions. However, in many studies conducted in recent years, it was determined that investors included emotional elements as well as rational elements in their decision-making process and therefore exhibited irrational behaviors by believing rumors instead of real information. It is thought that many factors such as personal characteristics, psychological factors, demographic and socio-economic factors play a role in the behavior of investors in purchasing a financial product.

In this study, the importance of herd behavior, which is one of the psychological factors that play a very important role in financial markets, on financial product purchasing process is examined in the light of the behavioral finance theory. It is thought that information included in the study will be useful for researchers who want to study herd behavior and for those who are interested in the subject.

To view the access options for this content please click here
Book part
Publication date: 1 March 2021

Harjum Muharam, Aditya Dharmawan, Najmudin Najmudin and Robiyanto Robiyanto

This study aims to analyze the herding behavior in Southeast Asian stock markets. A cross-sectional absolute deviation of the returns approach is used to identify the…

Abstract

This study aims to analyze the herding behavior in Southeast Asian stock markets. A cross-sectional absolute deviation of the returns approach is used to identify the presence of herding. Individual stocks and market returns were employed on each stock market on a daily basis during the period of January 2008 to December 2014 from five countries selected to obtain the necessary data. The samples observed consisted of stocks having higher liquidity and larger market capitalization for each stock market. The results suggest that there is significant evidence of herding behavior found in Kuala Lumpur and Philippines Stock Exchanges. In addition, there is no evidence of herding behavior in Indonesia, Singapore, and Thailand Stock Exchanges.

Details

Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics
Type: Book
ISBN: 978-1-83867-359-8

Keywords

To view the access options for this content please click here
Article
Publication date: 11 June 2018

Imed Medhioub and Mustapha Chaffai

The purpose of this paper is to examine the herding behavior in GCC Islamic stock markets.

Downloads
1006

Abstract

Purpose

The purpose of this paper is to examine the herding behavior in GCC Islamic stock markets.

Design/methodology/approach

The authors followed the methodology developed by Chiang and Zheng (2010) to test herding behavior. Cross-sectional tests have been considered in this paper. The authors use both OLS and GARCH estimations to examine herding behavior by using a sample of GCC Islamic stock markets.

Findings

By applying monthly data for the period between January 2006 and February 2016 for five Islamic GCC stock returns (Bahrain, Kuwait, Qatar, Saudi Arabia and UAE), results suggest a significant evidence of herd behavior in Saudi and Qatari Islamic stock markets only. When the authors take into account the existence of asymmetry in herd behavior between down- and up-market periods, evidence of herding behavior during down market periods in the case of Qatar and Saudi Arabia was found. In addition, the authors found that Kuwaiti and Emirates Islamic stock markets herd with the local conventional stock market, showing the interdependencies between Islamic and conventional markets.

Research limitations/implications

In this paper, the authors found an absence of herding behavior in some Islamic stock markets (Bahrain, Kuwait and Emirates). This is not the result of Shariah guidelines in these Islamic markets, but this is mainly due to the weak oscillations of returns which are very close to zero. In our future research, the authors could apply daily data and compare the results to those obtained in this paper by using monthly data.

Originality/value

This paper provides a practical framework in order to analyze the herding behavior concept for GCC Islamic stock markets. Its originality consists of linking the herding behavior to ethics and morality to verify whether the properties and guidelines of Islam are respected in Islamic stock markets. To the best of the authors’ knowledge, no other paper has treated the case of herding behavior in Islamic stock markets and taking into account the possible influence of the conventional market on the Islamic stock market that may impact herding behavior.

Details

Review of Behavioral Finance, vol. 10 no. 2
Type: Research Article
ISSN: 1940-5979

Keywords

To view the access options for this content please click here
Article
Publication date: 26 April 2019

Sharda Kumari, Bibhas Chandra and J.K. Pattanayak

The purpose of this paper is to investigate the relationships between personality, motivating factors and herding behaviour of individual investors. Investors’ personality…

Abstract

Purpose

The purpose of this paper is to investigate the relationships between personality, motivating factors and herding behaviour of individual investors. Investors’ personality has been classified consonant to the personality traits (compliant, aggressive and detached) encapsulated in Horney’s tripartite model.

Design/methodology/approach

To carry out this study, the author surveyed 363 individual investors of the Indian stock market using a structured questionnaire. Structural equation modelling is used to empirically test the relationships between personality, three motivating factors (cognitive capability, emotional factors and social factors) and herding behaviour.

Findings

The result reveals that, expect compliant personality, none shows proclivity towards herding behaviour. Investors possessing compliant personality are more influenced by social motivating factors; however, cognitive factor motivates aggressive personality, inhibiting herding behaviour. Furthermore, investors having detached personality are not influenced by any motivating factors of herding.

Research limitations/implications

The limitation is the difficulty in generalizing the results to overall country populations as the Indian stock market has a huge turnover every day, and the author’s survey consisted of only small sample of individual investors.

Practical implications

The outcomes of this study could possibly unveil a new insight to discern the behaviour of individual investors in the Indian stock market.

Originality/value

The influences of personality on investment choices have been investigated before, but the influence of personality specifically on herding behaviour has not being adequately investigated in an emerging economy like India, as very scanty literature is available on the influence of personality on herding behaviour. The study addresses this gap and further explores the association of personality with different motivating factors that cause herding bias.

Details

Kybernetes, vol. 49 no. 2
Type: Research Article
ISSN: 0368-492X

Keywords

To view the access options for this content please click here
Article
Publication date: 9 April 2018

Houda BenMabrouk

The purpose of this paper is to investigate herding behavior around the crude oil market and the stock market and the possible cross-herding behavior between the two…

Abstract

Purpose

The purpose of this paper is to investigate herding behavior around the crude oil market and the stock market and the possible cross-herding behavior between the two markets. The analysis examines also the herding behavior during financial turmoil and includes the investor sentiment and market volatility.

Design/methodology/approach

The authors use a modified version of the cross-sectional standard deviation and the cross-sectional absolute deviation to include investor sentiment, financial crisis and market volatility.

Findings

The authors find that the volatility of the stock market reduces the herding behavior around the oil market and boosts that around the stock market. However, the investors’ sentiment reduces the herding around the stock market and boosts that around the crude oil market. Consequently, the authors can conclude that the herding behavior around the two markets moves inversely and the herding in each market is enhanced by the lack of information in the other market.

Research limitations/implications

This paper is limited to the herding of stocks around the crude oil market and ignores the possible herding of commodities around the oil market.

Originality/value

The originality of the paper rests on the study of the possible cross-herding behavior between the oil market and the stock market especially during financial turmoil.

Details

Managerial Finance, vol. 44 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

To view the access options for this content please click here
Book part
Publication date: 28 September 2020

Ahmed Bouteska

This chapter examines the existence of dynamic herding behavior by Tunisian investors in the Tunisia stock market during the revolution period of 2011–2013. The sample…

Abstract

This chapter examines the existence of dynamic herding behavior by Tunisian investors in the Tunisia stock market during the revolution period of 2011–2013. The sample covers all Tunindex daily returns as a proxy for the Tunisia stock exchange index over the period 2007–2018. The author modifies the cross-sectional absolute deviation model to include all market conditions (bull and bear markets) and the geopolitical crisis effect corresponding to the Tunisian Jasmine revolution during 2011–2013, and show that herding is indeed not present in the Tunisia stock market including during its turmoil periods. These findings imply that the Tunisian emerging financial market became more vulnerable to adverse herding behavior after the revolution. There is also a clear implication for capitalist firms and angel investors in Tunisia that adverse herding behavior tends to exist on days of higher uncertainty and information asymmetry.

Details

Emerging Market Finance: New Challenges and Opportunities
Type: Book
ISBN: 978-1-83982-058-8

Keywords

To view the access options for this content please click here
Article
Publication date: 15 February 2021

Aleem Ansari and Valeed Ahmad Ansari

The purpose of this study is to empirically examine the presence of herding behavior of Indian investors using daily sample data drawn from the Standard and Poor's (S&P…

Abstract

Purpose

The purpose of this study is to empirically examine the presence of herding behavior of Indian investors using daily sample data drawn from the Standard and Poor's (S&P) Bombay Stock Exchange-500 Index over the period 2007–2018.

Design/methodology/approach

The study employs the model proposed by Chang et al. (2000), taking stock return dispersion as a measure to capture herding. The empirical results demonstrate the absence of herding behavior in all market states, that is, normal, up and down market conditions for the overall period.

Findings

Contrastingly, the study found negative herding behavior, which underlines that individuals are taking the decision away from the market consensus. The subperiod analysis corroborates the negative herding behavior. The results remain invariant across large, mid and small-capitalization firms except in one year, that is, 2009 for small firms. While using liquidity and sentiment as variables to examine herding, the study finds some evidence of herding behavior for high market liquidity state and sentiment. The findings of negative herding shed new light on herding behavior in the Indian stock market.

Originality/value

This pattern of behavior may indicate irrationality of investor behavior and the presence of noise traders who mistrust market-wide information. Behavioral factors such as overconfidence may explain this pattern of behavior.

Details

Managerial Finance, vol. 47 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

To view the access options for this content please click here
Article
Publication date: 15 October 2020

Sunaina Kanojia, Deepti Singh and Ashutosh Goswami

Herd behavior has been studied herein and tested based on primary respondents from Indian markets.

Abstract

Purpose

Herd behavior has been studied herein and tested based on primary respondents from Indian markets.

Design/methodology/approach

The paper expounds the empirical evidence by applying the cross-sectional absolute deviation method and reporting on herd behavior among decision-makers who are engaged in trading in the Indian stock market. Further, the study attempts to analyze the market-wide herding in the Indian stock market using 2230 daily, 470 weekly and 108 monthly observations of Nifty 50 stock returns for a period of nine years from April 1, 2009 to March 31, 2018 during the normal market conditions, extreme market conditions and in both increasing and decreasing market conditions.

Findings

In a span of a decade witnessing different market cycles, the authors’ results exhibit that there is no evidence of herding in any market condition in Indian stock market primarily due to the dominance of institutional investors and secondly because of low market participation by individual investors.

Originality/value

The results reveal that there is no impact of herd behavior on the stock returns in the Indian equity market during the normal market conditions. It highlights that the participation of individuals who are more prone to herding is more evident for short-run investments, contrary to long-term holdings.

Details

Review of Behavioral Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1940-5979

Keywords

1 – 10 of over 3000