Sustainable investing and herding behavior: sectoral insights from High-ESG firms

Mondher Bouattour (), Amine Ben Amar and Mariem Brahim
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Mondher Bouattour: Excelia Group | La Rochelle Business School, LGTO - Laboratoire de Gestion et des Transitions Organisationnelles - EPE UT - Université de Toulouse - Comue de Toulouse - Communauté d'universités et établissements de Toulouse
Amine Ben Amar: ABS - Africa Business School [UM6P, Morocco] - UM6P - Université Mohammed VI Polytechnique = Mohammed VI Polytechnic University [Ben Guerir], LEFMI - Laboratoire d’Économie, Finance, Management et Innovation - UR UPJV 4286 - UPJV - Université de Picardie Jules Verne
Mariem Brahim: PSB - Paris School of Business - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université

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Abstract: Purpose This study examines herding behavior within the ESG segment of the U.S. stock market, both at the aggregate and sectoral levels. Design/methodology/approach The analysis employs both static and time-varying approaches to detect herding behavior. It distinguishes between aggregate market-level and sector-level herding and further investigates the impact of market conditions, liquidity and geopolitical events (e.g. the Russia–Ukraine conflict) on herding dynamics. Findings The results indicate no evidence of herding at the aggregate market level. However, sectoral analysis identifies significant herding in the communication sector under both bullish and bearish conditions. Additionally, herding is more pronounced during periods of high or moderate liquidity in the Consumer Staples, Real Estate and Utilities sectors. The Russia–Ukraine conflict exacerbates herding across eight of the eleven sectors. The time-varying analysis confirms the static analysis findings, showing intensified herding behavior during high uncertainty periods. Originality/value This study provides novel insights into the presence of herding behavior within the ESG segment of the U.S. stock market, offering a sector-specific perspective. It highlights the influence of liquidity, geopolitical crises and market uncertainty on herding behavior, contributing to the broader literature on behavioral finance and ESG investing.

Keywords: ESG; Herding behavior; Sectoral analysis (search for similar items in EconPapers)
Date: 2026-03-27
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Published in Journal of Economic Studies, 2026, pp.1-22. ⟨10.1108/JES-03-2025-0172⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05579444

DOI: 10.1108/JES-03-2025-0172

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