Institutional Herding

Research output: Contribution to journalReview articlepeer-review

467 Scopus citations


Institutional investors' demand for a security this quarter is positively correlated with their demand for the security last quarter. We attribute this to institutional investors following each other into and out of the same securities ("herding") and institutional investors following their own lag trades. Although institutional investors are "momentum" traders, little of their herding results from momentum trading. Moreover, institutional demand is more strongly related to lag institutional demand than lag returns. Results are most consistent with the hypothesis that institutions herd as a result of inferring information from each other's trades.

Original languageEnglish (US)
Pages (from-to)165-206
Number of pages42
JournalReview of Financial Studies
Issue number1
StatePublished - 2004

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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