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Institutional industry herding

Listed author(s):
  • Choi, Nicole
  • Sias, Richard W.
Registered author(s):

    We examine whether institutional investors follow each other into and out of the same industries. Our empirical results reveal strong evidence of institutional industry herding. The cross-sectional correlation between the fraction of institutional traders buying an industry this quarter and the fraction buying last quarter, for example, averages 40%. Additional tests suggest that correlated signals primarily drive institutional industry herding. Our results also provide empirical support for "style investing" models.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0304-405X(09)00140-8
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    Article provided by Elsevier in its journal Journal of Financial Economics.

    Volume (Year): 94 (2009)
    Issue (Month): 3 (December)
    Pages: 469-491

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    Handle: RePEc:eee:jfinec:v:94:y:2009:i:3:p:469-491
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505576

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