Exploring the Herding Behaviour in Indian Mutual Fund Industry

Patro, Archana; Kanagaraj, A.

doi:10.5296/ajfa.v4i1.1478

Cited by 14 publications

(11 citation statements)

References 14 publications

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“…The trading behaviour of mutual fund managers in India exhibit strong evidence of herding using LSV model and the study also showed herding behaviour is reflected in large capitalisation stocks as well as on big and famous stocks. The study found herding in Indian market is considered to be more when compared to other developed markets (Patro and Kanagaraj, 2012).…”

Section: Background Of the Studymentioning

confidence: 82%

Bulk and block holders herding behaviour

Ganesh

Naresh

Thiyagarajan

2018

SAJBS

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Purpose The purpose of this paper is to examine industry herding among the institutional investors and to find whether their herding behaviour is intentional or unintentional. Design/methodology/approach The study uses Lakonishok et al. (1992) model to examine the presence of industry herding behaviour among institutional investors. To determine whether the herding observed is intentional or unintentional, herding measure is regressed with volatility, volume, beta and return. The period of the study is from 1 April 2005-31 March 2015. Findings The findings of the study showed that though institutional investors have herding tendency towards most of the industries, in the overall period industry herding was not significant. The herding found in some industrial sectors was linked to economic performance of those sectors in India during the period of study and hence the herding was unintentional in nature. Research limitations/implications This is the first attempt to study industry herding among institutional investors and their intent in Indian market ever since the country opened its market to foreign investors in a big way. Present study is limited to the use of only bulk/block data instead of the entire trading data for the period. Originality/value This study is the first attempt to investigate industry herding behaviour of institutional investors in the market using their bulk and block trading data. The herding observed in well performing industries has been shown to be unintentional and hence rational. The results indicate that the entry of big institutional investors, including foreign institutions into the Indian market has not destabilised the market by irrational herding.

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Section: Background Of the Studymentioning

confidence: 82%

Bulk and block holders herding behaviour

Ganesh

Naresh

Thiyagarajan

2018

SAJBS

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“…Mutual fund herding for large capitalisation shares was more prominent in all periods than the small and medium capitalisation shares [44]. Fund managers herd more while purchasing a stock and trading voluminous stocks as compared to trading a stock [45]. The fund managers herd in order to safeguard their careers and get immunity in numbers.…”

Section: Herding and Mutual Fundsmentioning

confidence: 99%

Herding Behaviour in Investment Decision Making: A Review

Dewan

Dharni

2019

JEMT

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Herding denotes how individuals act together in a group without any centralized direction. Herding is widely studied as it drives asset prices away from the fundamental value and there are concerns it leads to volatility, destabilizes the market and increases the fragility of the financial market. In this paper, a concise review of the literature of herding is provided. Various types of herding, its significance and occurrences along with the determinants are discussed. Various approaches used for measuring herding have been reviewed. The relationship of herding along with other variables such as market conditions, volatility, and liquidity is reviewed and studied. For the purpose of drafting the review paper, 79 papers for over three decades have been consulted. Further, future research directions are included for the benefit of the academicians, researchers and policymakers.

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“…Hung, Lu and Lee (2010) examined the herd behavior of mutual fund managers in Taiwan stock market, and they found that there is a tendency of herd behavior in that market. Patro and Kanagaraj (2012) analyzed the trading activity of Indian mutual funds and examined whether Indian mutual fund managers are engaged in herd behavior. As a result, they found strong evidence of herd behavior.…”

Section: Literature Reviewmentioning

confidence: 99%

An Investigation of Herding Behavior in Turkish Mutual Fund Industry

Mandaci¹,

Ergün²,

Yeşilova³

2018

Finansal Araştırmalar Ve Çalışmalar Dergisi

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This paper investigates the herding behavior of mutual fund managers in Turkey by using monthly data for the period from March 2014 to April 2017. We collect data from the monthly reports of 18 common stock mutual funds. First, we use the herding measure (Hi,t) that was developed by Lakanishok, Shleifer and Vishny (1992) to point out the stock picking herding, and then we apply the buying and selling side herding measures of Wermers (1999) to see the direction of this stock picking herding. Additionally, we apply an alternative measure of herding introduced by Oehler (1998), to determine the overall extent of mutual fund herding (market-wide herding). While our results on stock picking herding indicate the existence of any herding, the results on market-wide herding indicates the presence of it.

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Exploring the Herding Behaviour in Indian Mutual Fund Industry

Cited by 14 publications

References 14 publications

Bulk and block holders herding behaviour

Bulk and block holders herding behaviour

Herding Behaviour in Investment Decision Making: A Review

An Investigation of Herding Behavior in Turkish Mutual Fund Industry

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