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Prevalence of Herding in IPO Immediate Aftermarket in JSE Main Board

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  • Kinyuah, Samuel
  • Tshehla, Makgopa

Abstract

Purpose: IPO aftermarket is stressful and uncertain with investors holding variant information sets. Despites stringent listing requirements in Johannesburg Securities Exchange (JSE), some investors are more information than other due to access of private information and high abilities to analyse information presented in prospectuses. Due to this, herding is likely to occur as less informed investors seek to imitate decisions of more informed investors. The aim of this paper was to investigate prevalence and magnitude of herding behaviour in IPO aftermarket in JSE.Design/Methodology/Approach: The study used market price and volume data of newly listed shares as well as other listed shares for the first 20 days on IPO listing for all IPOs offered between 2000 and 2018. The study adopted& symmetrical cross-sectional absolute deviation as tool analysis.&Findings: Majority of IPO aftermarkets exhibited strong prevalence of herding while a few reported weak prevalence of herding or no significance prevalence of herding. Organisations in financials, industrial and consumer good sectors reported strong prevalence of herding while those in agricultural sector reporting weak herding. Prevalence of herding was not to vary with market returns.Implications/Originality/Value: herding as a behaviour bias is driven by price - information signals and investors sentiment.

Suggested Citation

  • Kinyuah, Samuel & Tshehla, Makgopa, 2026. "Prevalence of Herding in IPO Immediate Aftermarket in JSE Main Board," Journal of Accounting and Finance in Emerging Economies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 12(2), pages 235-246, July.
    • Handle: RePEc:src:jafeec:v:12:y:2026:i:2:p:235-246
    DOI: http://doi.org/10.26710/jafee.v12i2.3787
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