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Do Institutional Investors Herd in Emerging Markets? Evidence from the Taiwan Stock Market

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  • Jonchi Shyu
  • Hsin-Ming Sun

Abstract

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

Suggested Citation

  • Jonchi Shyu & Hsin-Ming Sun, 2010. "Do Institutional Investors Herd in Emerging Markets? Evidence from the Taiwan Stock Market," Asian Journal of Finance & Accounting, Macrothink Institute, vol. 2(2), pages 119-119, December.
    • Handle: RePEc:mth:ajfa88:v:2:y:2010:i:2:p:1-19
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    References listed on IDEAS

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    1. Luis Ferruz Agudo & J. L. Sarto & L. Vicente, 2008. "Herding behaviour in Spanish equity funds," Applied Economics Letters, Taylor & Francis Journals, vol. 15(7), pages 573-576.
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    Cited by:

    1. Elsayed Elsiefy & Moustafa Ahmed AbdElaal, 2017. "Analyzing Foreign Investors Behavior in the Emerging Stock Market: Evidence from Qatar Stock Market," Accounting and Finance Research, Sciedu Press, vol. 6(4), pages 197-197, Novebmer.
    2. Yi-Chang Chen & Hung-Che Wu & Yuanyuan Zhang & Shih-Ming Kuo, 2021. "A Transmission of Beta Herding during Subprime Crisis in Taiwan’s Market: DCC-MIDAS Approach," IJFS, MDPI, vol. 9(4), pages 1-16, December.
    3. Zheng, Zhigang & Tang, Ke & Liu, Yaodong & Guo, Jie Michael, 2021. "Gender and herding," Journal of Empirical Finance, Elsevier, vol. 64(C), pages 379-400.

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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