Institutional industry herding

Nicole Choi; Richard W. Sias

doi:10.1016/j.jfineco.2008.12.009

Institutional industry herding

Nicole Choi, Richard W. Sias

Research output: Contribution to journal › Article › peer-review

241 Scopus citations

Abstract

We examine whether institutional investors follow each other into and out of the same industries. Our empirical results reveal strong evidence of institutional industry herding. The cross-sectional correlation between the fraction of institutional traders buying an industry this quarter and the fraction buying last quarter, for example, averages 40%. Additional tests suggest that correlated signals primarily drive institutional industry herding. Our results also provide empirical support for "style investing" models.

Original language	English (US)
Pages (from-to)	469-491
Number of pages	23
Journal	Journal of Financial Economics
Volume	94
Issue number	3
DOIs	https://doi.org/10.1016/j.jfineco.2008.12.009
State	Published - Dec 2009
Externally published	Yes

Keywords

Herding
Institutional investors
Style investing

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

Access to Document

10.1016/j.jfineco.2008.12.009

Cite this

@article{1df4e030c46343f1b883fdd3708b9008,

title = "Institutional industry herding",

abstract = "We examine whether institutional investors follow each other into and out of the same industries. Our empirical results reveal strong evidence of institutional industry herding. The cross-sectional correlation between the fraction of institutional traders buying an industry this quarter and the fraction buying last quarter, for example, averages 40%. Additional tests suggest that correlated signals primarily drive institutional industry herding. Our results also provide empirical support for {"}style investing{"} models.",

keywords = "Herding, Institutional investors, Style investing",

author = "Nicole Choi and Sias, {Richard W.}",

year = "2009",

month = dec,

doi = "10.1016/j.jfineco.2008.12.009",

language = "English (US)",

volume = "94",

pages = "469--491",

journal = "Journal of Financial Economics",

issn = "0304-405X",

publisher = "Elsevier",

number = "3",

}

TY - JOUR

T1 - Institutional industry herding

AU - Choi, Nicole

AU - Sias, Richard W.

PY - 2009/12

Y1 - 2009/12

N2 - We examine whether institutional investors follow each other into and out of the same industries. Our empirical results reveal strong evidence of institutional industry herding. The cross-sectional correlation between the fraction of institutional traders buying an industry this quarter and the fraction buying last quarter, for example, averages 40%. Additional tests suggest that correlated signals primarily drive institutional industry herding. Our results also provide empirical support for "style investing" models.

AB - We examine whether institutional investors follow each other into and out of the same industries. Our empirical results reveal strong evidence of institutional industry herding. The cross-sectional correlation between the fraction of institutional traders buying an industry this quarter and the fraction buying last quarter, for example, averages 40%. Additional tests suggest that correlated signals primarily drive institutional industry herding. Our results also provide empirical support for "style investing" models.

KW - Herding

KW - Institutional investors

KW - Style investing

UR - http://www.scopus.com/inward/record.url?scp=70349832519&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=70349832519&partnerID=8YFLogxK

U2 - 10.1016/j.jfineco.2008.12.009

DO - 10.1016/j.jfineco.2008.12.009

M3 - Article

AN - SCOPUS:70349832519

SN - 0304-405X

VL - 94

SP - 469

EP - 491

JO - Journal of Financial Economics

JF - Journal of Financial Economics

IS - 3

ER -

Institutional industry herding

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this