Institutional industry herding

Nicole Choi and Richard W. Sias

Journal of Financial Economics, 2009, vol. 94, issue 3, 469-491

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 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (170)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:94:y:2009:i:3:p:469-491

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