The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market
This paper examines whether UK fund managers engage in herding behaviour in the stock market using the dynamic herding measure, whether their herding behaviour is different during bullish and bearish periods, whether most of their herding is informational, which types of informational reasons act as...
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| Format: | Article |
| Language: | English |
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Economists' Association of Vojvodina
2017-01-01
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| Series: | Panoeconomicus |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/1452-595X/2017/1452-595X1700016L.pdf |
| _version_ | 1819056423984693248 |
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| author | Lu Yang-Cheng Fang Hao Lee Yen-Hsien |
| author_facet | Lu Yang-Cheng Fang Hao Lee Yen-Hsien |
| author_sort | Lu Yang-Cheng |
| collection | DOAJ |
| description | This paper examines whether UK fund managers engage in herding behaviour in the stock market using the dynamic herding measure, whether their herding behaviour is different during bullish and bearish periods, whether most of their herding is informational, which types of informational reasons act as the main drivers of their herding and whether there are non-informational drivers of their herding. Our results reveal that UK fund managers engage in significant herding behaviour and that this behaviour does not differ significantly from bullish to bearish stock markets. Moreover, we confirm that there are weak positive correlations between fund managers’ herding and stock returns within the subsequent year, which indicates that their herding is mainly informational. To improve portfolio performance, other investors could follow UK fund managers and purchase stocks overbought by them with at least 15 traders quarterly in the following one-year period, particularly for growth-type, sectorspecific and international-type funds. Moreover, because they are more likely to herd in large-capitalisation securities, the informational reasons driving managers’ herding behaviour are mainly related to investigative herding. We also find that growth-type and international-type funds are more likely to herd with similar- type funds. This finding may result from reputational and characteristic herding, which illustrates that non-informational reasons for managers’ herding still exist. |
| first_indexed | 2024-12-21T13:23:11Z |
| format | Article |
| id | doaj.art-feac58f9487e4796b03469ed8393fbf4 |
| institution | Directory Open Access Journal |
| issn | 1452-595X 2217-2386 |
| language | English |
| last_indexed | 2024-12-21T13:23:11Z |
| publishDate | 2017-01-01 |
| publisher | Economists' Association of Vojvodina |
| record_format | Article |
| series | Panoeconomicus |
| spelling | doaj.art-feac58f9487e4796b03469ed8393fbf42022-12-21T19:02:32ZengEconomists' Association of VojvodinaPanoeconomicus1452-595X2217-23862017-01-0164557159210.2298/PAN150212016L1452-595X1700016LThe informational and non-informational compositions of UK fund managers’ dynamic herding in the stock marketLu Yang-Cheng0Fang Hao1Lee Yen-Hsien2Ming Chuan University, Finance Department, Taipei, TaiwanHwa Hsia Institute of Technology, Department of Assets and Property Management, Chung Ho, Taipei, Taiwan, R.O.C.Chung Yuan Christian University, Department of Finance, Chung Li, Taiwan, R.O.CThis paper examines whether UK fund managers engage in herding behaviour in the stock market using the dynamic herding measure, whether their herding behaviour is different during bullish and bearish periods, whether most of their herding is informational, which types of informational reasons act as the main drivers of their herding and whether there are non-informational drivers of their herding. Our results reveal that UK fund managers engage in significant herding behaviour and that this behaviour does not differ significantly from bullish to bearish stock markets. Moreover, we confirm that there are weak positive correlations between fund managers’ herding and stock returns within the subsequent year, which indicates that their herding is mainly informational. To improve portfolio performance, other investors could follow UK fund managers and purchase stocks overbought by them with at least 15 traders quarterly in the following one-year period, particularly for growth-type, sectorspecific and international-type funds. Moreover, because they are more likely to herd in large-capitalisation securities, the informational reasons driving managers’ herding behaviour are mainly related to investigative herding. We also find that growth-type and international-type funds are more likely to herd with similar- type funds. This finding may result from reputational and characteristic herding, which illustrates that non-informational reasons for managers’ herding still exist.http://www.doiserbia.nb.rs/img/doi/1452-595X/2017/1452-595X1700016L.pdfinvestigative herdingreputational herdingcharacteristic herdingmutual fundUK |
| spellingShingle | Lu Yang-Cheng Fang Hao Lee Yen-Hsien The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market Panoeconomicus investigative herding reputational herding characteristic herding mutual fund UK |
| title | The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market |
| title_full | The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market |
| title_fullStr | The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market |
| title_full_unstemmed | The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market |
| title_short | The informational and non-informational compositions of UK fund managers’ dynamic herding in the stock market |
| title_sort | informational and non informational compositions of uk fund managers dynamic herding in the stock market |
| topic | investigative herding reputational herding characteristic herding mutual fund UK |
| url | http://www.doiserbia.nb.rs/img/doi/1452-595X/2017/1452-595X1700016L.pdf |
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