Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
Although numerous studies have been conducted on herding behaviours, only a limited number has focused on the governance factor that may influence herding activity. This paper examines whether countries’ governance influences herding decisions among investors. Applying the cross-sectional absolu...
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| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Malaysian Finance Association
2017
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/65958/1/MY%20PAPER-CAPITAL%20MARKET%20REVIEW.pdf http://irep.iium.edu.my/65958/ http://www.mfa.com.my/wp-content/uploads/2017/12/vol252_pp.01-14-Nasarudin-et-al..pdf |
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| Summary: | Although numerous studies have been conducted on herding
behaviours, only a limited number has focused on the governance factor that
may influence herding activity. This paper examines whether countries’
governance influences herding decisions among investors. Applying the
cross-sectional absolute deviation (CSAD) method on data from 60 countries,
the results on herding estimation based on the country level segmented into
three panels reveal that the strict governance would help to minimize herding
activity. Among countries with strict governance, only six report herding
activity. However, the results show that herding activity is reported more
often in countries with moderate or weak governance. Our results also
suggest that herding activity will be practiced more in the country where the
information dissemination is less efficient due to its less-strict governance
level. |
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