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Business Groups and Herding Behavior during the COVID-19 Pandemic

Author

Listed:
  • Joao Paulo Vieito

    (Instituto Politécnico de Viana do Castelo and Applied Management Research Center (UNIAG), Portugal)

  • Christian Espinosa-Mendez

    (Departamento de Administración, Facultad de Administración y Economía, Universidad de Santiago de Chile)

  • Carlos Maquieira

    (CENTRUM Graduate Business School. Pontificia Universidad Católica del Perú)

Abstract

This article studies whether herding behavior is present in stock returns of business groups during the COVID-19 pandemic in Latin American Integrated Market (MILA), composed by Chile, Colombia, Mexico, and Peru. Using the series of daily prices and daily traded volumes of the shares of the companies affiliated with a business group and that are included in the stock market indices S&P/IPSA (Chile), COLCAP (Colombia), IPC (Mexico) and S&P/BVL (Peru), from January 1, 2010 to October 27, 2021, with the exception of Mexico, we observe herding behavior during COVID-19 in businesses affiliated with business groups in MILA. In addition, from May 2020 onwards, stock behavior shifts to reverse herding. This study also reports that when the market is up herding is stronger during COVID-19. Something similar occurs for low market volatility and low volume of trading.

Suggested Citation

  • Joao Paulo Vieito & Christian Espinosa-Mendez & Carlos Maquieira, 2022. "Business Groups and Herding Behavior during the COVID-19 Pandemic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 72(3), pages 222-241, September.
    • Handle: RePEc:fau:fauart:v:72:y:2022:i:3:p:222-241
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    File URL: https://journal.fsv.cuni.cz/mag/article/show/id/1504
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    More about this item

    Keywords

    herding behavior; business groups; emerging markets; covid-19; stock markets; MILA;
    All these keywords.

    JEL classification:

    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G00 - Financial Economics - - General - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F30 - International Economics - - International Finance - - - General
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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