Investigation of herding behaviour in developed and developing countries: does country governance factor matters?

Mohd Nasarudin, Ahmad Fawwaz and Amin Noordin, Bany Ariffin Amin and Law, Siong Hook and Yahya, Mohd Hisham (2017) Investigation of herding behaviour in developed and developing countries: does country governance factor matters? Capital Market Review, 25 (2). pp. 1-14. ISSN 1823-4445

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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:	Article (Journal)
Additional Information:	7732/65958
Uncontrolled Keywords:	Herding; Governancel Market efficiency; JEL classification: G14, G15, G19
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 Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr Ahmad Fawwaz Mohd Nasarudin
Date Deposited:	25 Oct 2018 11:56
Last Modified:	25 Oct 2018 11:56
URI:	http://irep.iium.edu.my/id/eprint/65958

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