Institutional Herding

Institutional industry herding: Intentional or spurious?

“…More specifically, institutional investors have been found to herd significantly in a rather diverse set of markets, including Germany (Walter and Weber, 2006;Kremer and Nautz, 2011), Portugal (Holmes et al, 2011), Taiwan (Chen et al, 2012), the UK (Wylie, 2005) and the US (e.g. Lakonishok et al, 1992;Wermers, 1999;Sias, 2004;Choi and Sias, 2009). …”

Reputational Herding in Financial Markets: A Laboratory Experiment

“…As a consequence, our present findings mainly apply to stocks respectively markets in which uninformed traders play a limited role. As opposed to heavily traded stocks, this may particularly hold for stocks that are difficult to assess or to arbitrage (see, e.g., Blasco and Ferreruela [2008], Sias [2004], Palomino [1996]). It would be an interesting relevant topic for future experimental research to study how the presence of uninformed traders affects financial market outcomes.…”

“…In summary, these papers only provide mixed evidence for the presence of reputational herding in financial markets. For example, Sias [2004] and Ehrbeck and Waldmann [1996] fail to find evidence for reputationdriven herd behavior. Welch [2000] argues that the observed clustering of behavior could be due to either social learning or due to reputational concerns of investors.…”

“…This literature has two aims: to verify whether there is herding in financial markets, and, if yes, to investigate the reasons for herd behavior. In particular, various authors have investigated whether, due to career concerns, there is reputational herding by investment newsletters (see, e.g., Graham [1999]), macroeconomic forecasters (see, e.g., Lamont [2002], Ehrbeck and Waldmann [1996]), security analysts (see, e.g., Hong and Kubik [2003], Hong, Kubik and Solomon [2000], Welch [2000]), mutual fund managers (see, e.g., Massa and Patgiri [2007], Chevalier and Ellison [1999]), or institutional investors (see, e.g., Sias [2004]). In summary, these papers only provide mixed evidence for the presence of reputational herding in financial markets.…”

Analysis of Herd Behavior Using Quantile Regression: Evidence from Karachi Stock Exchange (KSE)

“…Grinblatt, Titman, and Wermers (1995) defined herding as "the extent to which the group either predominantly buys or predominantly sells the same stock at the same time". Sias (2004) defined as"following each other into (or out of) the same securities over some period of time". Theories of herding can be categorized into two subgroups i.e.…”