Herding and feedback trading by institutional and individual investors

John R. Nofsinger, Richard W. Sias

Research output: Contribution to journalArticlepeer-review

744 Scopus citations


We document strong positive correlation between changes in institutional ownership and returns measured over the same period. The result suggests that either institutional investors positive-feedback trade more than individual investors or institutional herding impacts prices more than herding by individual investors. We find evidence that both factors play a role in explaining the relation. We find no evidence, however, of return mean-reversion in the year following large changes in institutional ownership - stocks institutional investors purchase subsequently out-perform those they sell. Moreover, institutional herding is positively correlated with lag returns and appears to be related to stock return momentum.

Original languageEnglish (US)
Pages (from-to)2263-2295
Number of pages33
JournalJournal of Finance
Issue number6
StatePublished - Dec 1999

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Herding and feedback trading by institutional and individual investors'. Together they form a unique fingerprint.

Cite this