 Herd behaviour in buyout investmentsAxel Buchner, Abdulkadir Mohamed and Armin Schwienbacher Journal of Corporate Finance, 2020, vol. 60, issue C Abstract: In this study, we explored the presence of correlated investment choices (i.e., herd behaviour) among international buyout funds by distinguishing among the contemporaneous and the following herding of smaller funds towards the top market players (i.e., the top quartile in terms of the fund size). In our analyses, we found that the industry herding towards the largest ones is common in private equity (PE) but mostly during market contractions or the deterioration of general market conditions. Moreover, we also found that as capital inflows into the PE industry slow down, herding occurs more often. This finding is consistent with the increasing competition for new capital fundraising in downturns, which can induce PE funds to herd more. We also found that both types of herding generate higher fund returns and lower risk for funds that are capable of herding. Additionally, we documented the persistence in herding. Keywords: Herd behaviour; Buyout; Private equity; Performance; Risk (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:60:y:2020:i:c:s0929119918301949 DOI: 10.1016/j.jcorpfin.2019.101503 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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