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Do conventional and new energy stock markets herd differently? Evidence from China

Author

Listed:
  • Hong, Hui
  • Jiang, Lijun
  • Zhang, Cheng
  • Yue, Zhonggang

Abstract

This research investigates herding formation in a competing market setting of China’s conventional and new energy stock markets, making it the first of its kind to specify the difference in herding across these markets. Our results highlight investors’ tendency to herd in both types of energy markets with herding stronger for new energy stocks. Such a behavior tends to vary over time, displaying a dynamic pattern. Mixed evidence appears for the COVID-19 effect on herding: new energy stock investors choose to follow market consensus during the pandemic period, whereas their decision does not apply to conventional energy stock investors. Finally, information arrivals from the conventional energy market barely influence herding in the new energy market, while those from the new energy market help weaken herding in the conventional energy market. The evidence provides important implications for both energy stock investors and financial regulators.

Suggested Citation

  • Hong, Hui & Jiang, Lijun & Zhang, Cheng & Yue, Zhonggang, 2024. "Do conventional and new energy stock markets herd differently? Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:riibaf:v:67:y:2024:i:pa:s0275531923002465
    DOI: 10.1016/j.ribaf.2023.102120
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    Keywords

    Herding behavior; Conventional energy market; New energy market; China;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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