Advanced Search
MyIDEAS: Login

Persistence and Reversal in Herd Behavior: Theory and Application to the Decision to Go Public

Contents:

Author Info

  • Lee Nelson
Registered author(s):

    Abstract

    We model rational herd behavior when the underlying value changes over time, with payoffs that are either dependent or independent of the underlying value. We show that herding does not last forever and is not monotone in signal quality. High correlation among agents' actions does not necessarily imply herding. This suggests alternative empirical methods are needed to detect herding. The model has many applications, including the IPO decision in which payoffs are state dependent. The model implies that the decision to go public is more likely associated with herding than the decision to delay an IPO. Copyright 2002, Oxford University Press.

    Download Info

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Bibliographic Info

    Article provided by Society for Financial Studies in its journal Review of Financial Studies.

    Volume (Year): 15 (2002)
    Issue (Month): 1 (March)
    Pages: 65-95

    as in new window
    Handle: RePEc:oup:rfinst:v:15:y:2002:i:1:p:65-95

    Contact details of provider:
    Postal: Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.
    Fax: 919-677-1714
    Email:
    Web page: http://www.rfs.oupjournals.org/
    More information through EDIRC

    Order Information:
    Web: http://www4.oup.co.uk/revfin/subinfo/

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Michael Stolpe, 2004. "Europe's Entry into the Venture Capital Business: Efficiency and Policy," Kiel Working Papers 1223, Kiel Institute for the World Economy.
    2. Ivan Pastine & Tuvana Pastine, 2006. "Social Learning in Continuous Time - When are Informational Cascades More Likely to be Inefficient?," Working Papers 200621, School Of Economics, University College Dublin.
    3. Ivan Pastine & Tuvana Pastine, 2006. "Signal Accuracy and Informational Cascades," Working Papers 200620, School Of Economics, University College Dublin.
    4. Diks, C.G.H. & Weide, R. van der, 2003. "Herding, A-synchronous Updating and Heterogeneity in Memory in a CBS," CeNDEF Working Papers 03-06, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    5. Richard J. Rosen & Scott B. Smart & Chad J. Zutter, 2005. "Why do firms go public? evidence from the banking industry," Working Paper Series WP-05-17, Federal Reserve Bank of Chicago.
    6. Tuvana Pastine, 2004. "Comparative Statics in a Herding Model of Investment," Econometric Society 2004 North American Summer Meetings 260, Econometric Society.
    7. repec:dgr:uvatin:2003103 is not listed on IDEAS

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:oup:rfinst:v:15:y:2002:i:1:p:65-95. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.