Investigation of herding behavior in developed and developing countries: Does country governance factor matters?

Mohd Nasarudin, Ahmad Fawwaz and Noordin, Bany Ariffin Amin and Law, Siong Hook and Yahya, Mohd Hisham (2017) Investigation of herding behavior in developed and developing countries: Does country governance factor matters? In: The 19th Malaysian Finance Association Conference (MFAC) 2017 : Challenges and New Directions amidst Global Financial Uncertainty, 16th - 18th May 2017, 16-18 MAY 2017, Universiti Tunku Abdul Rahman Kampar. (Unpublished)

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Abstract

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.

Item Type:	Conference or Workshop Item (Plenary Papers)
Additional Information:	7732/57831
Uncontrolled Keywords:	Herding, governance, market efficiency.
Subjects:	H Social Sciences > HG Finance > HG4501 Stocks, investment, speculation
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr Ahmad Fawwaz Mohd Nasarudin
Date Deposited:	01 Mar 2018 13:42
Last Modified:	01 Mar 2018 13:42
URI:	http://irep.iium.edu.my/id/eprint/57831

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