Institutional Herding in the ADR Market

Herding, momentum and investor over-reaction

“…Other research using a different approach than ours suggest that institutions may also herd for reasons other than information (see, e.g., Grinblatt et al 1995;Li and Yung 2004;Sias 2004;Sharma et al 2004). Bikhchandani and Sharma (2000) suggest three reasons for institutional herding.…”

Institutional herding in international markets

“…International herding papers in a single market setting include studies of: Japan (Kim and Nofsinger, 2005); Korea (Choe et al, 1999;Kim and Wei, 2002); Taiwan (Chen and Hong, 2006); Israel (Venezia et al, 2011); Germany (Walter and Weber, 2006;Kremer and Nautz, 2013); the United Kingdom (Wylie, 2005); Portugal (Lobao and Serra, 2007); Poland (Voronkova and Bohl, 2005); India (Lakshman et al, 2013); Hong Kong (Zhou and Lai, 2009). In addition, Li and Yung (2004) study herding in American Depository Receipts. Most of the non-US studies above examine herding behavior in great detail by employing high frequency holdings data.…”

Do fund managers herd in frontier markets — and why?

“…In view of the above motives underlying institutional herding, the possibility of fund managers imitating each other in their trades has been extensively researched during the past two decades with evidence from a large array of long-established developed and emerging markets -including the US (Li and Yung, 2004;Sias, 2004;Choi and Sias, 2009;Liao et al, 2011), Germany (Walter and Weber, 2006;Kremer and Nautz, 2013), South Korea (Choe et al, 1999;Kim and Wei, 2002a;2002b) and Taiwan (Hung et al, 2010;Lu et al, 2012) -suggesting that investment professionals exhibit significant mimicry in their trading behaviour. However, no evidence has as yet been reported regarding institutional herding for the specific subset of markets known as frontier markets, despite the increased attention they have been receiving recently from professional investors (De Groot et al, 2012).…”