Open AccessDo Institutional Investors Herd in Emerging Markets? Evidence from the Taiwan Stock Market
Author(s) -
Jonchi Shyu,
Hsin-Ming Sun
Publication year - 2010
Publication title -
asian journal of finance and accounting
Language(s) - English
Resource type - Journals
ISSN - 1946-052X
DOI - 10.5296/ajfa.v2i2.456
Subject(s) - herding , herd behavior , institutional investor , stock market , stock (firearms) , financial economics , information cascade , economics , business , monetary economics , herd , emerging markets , finance , corporate governance , mechanical engineering , medicine , paleontology , statistics , mathematics , engineering , horse , veterinary medicine , geography , forestry , biology
This study employs daily trading data to examine the herding behavior of institutional investors in Taiwan’s stock market. Our results show evidence of herding for institutional investors; indeed, they would follow both other institutional trades and their own trades. We also find that institutional investors are not driven principally by impulse or instinct and that “herded into” stocks do not exhibit unusual return reversals. Moreover, the intensity of herding is negatively related to firm size, which suggests that institutional herding in Taiwan’s stock market is driven primarily by information cascades.
Keywords: Institutional investor, Herding behavior, Information cascade, Emerging markets
JEL Classifications: G11, G20, N25