Buy together, but recycle alone: sentiment-driven herding behavior in oceanic dry bulk shipping

Konstantinos D. Melas and Nektarios Michail

Review of Behavioral Finance, 2022, vol. 15, issue 4, 534-549

Abstract: Purpose - The authors employ the vessels that comprise the dry bulk segment of the maritime industry and examine how market sentiment affects the herding behavior of shipping investors in a real asset market. Design/methodology/approach - The authors employ a threshold regression model to examine how changes in market sentiment can affect herding behavior in oceanic dry bulk shipping. Findings - The results show that the behavioral aspect of investing, measured through intentional and unintentional herding, contrary to the results for financial markets, is affected by sentiment on the buy side (newbuildings) but not on the sell side (scrapping). Furthermore, the authors provide evidence that when market sentiment is negative, investors tend to follow market leaders (intentional herding), while, when sentiment is positive, unintentional herding leads to common investment practices among shipping investors. Originality/value - The results have significant implications both for academics and for practitioners since they reflect a clear distinction of the pattern of investment decisions for real assets, compared to financial assets.

Keywords: Shipping markets; Dry bulk; Real assets; Sentiment; Herding behavior; Threshold regression; G11; G12; G13; G20 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rbfpps:rbf-06-2021-0103

DOI: 10.1108/RBF-06-2021-0103

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