Business Groups and Herding Behavior during the COVID-19 Pandemic

João paulo Vieito (), Christian Espinosa-Mendez () and Carlos Maquieira ()
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Christian Espinosa-Mendez: Departamento de Administración, Facultad de Administración y Economía, Universidad de Santiago de Chile

Czech Journal of Economics and Finance (Finance a uver), 2022, vol. 72, issue 3, 222-241

Abstract: This article studies whether herding behavior is present in stock returns of business groups during the COVID-19 pandemic in Latin American Integrated Market (MILA), composed by Chile, Colombia, Mexico, and Peru. Using the series of daily prices and daily traded volumes of the shares of the companies affiliated with a business group and that are included in the stock market indices S&P/IPSA (Chile), COLCAP (Colombia), IPC (Mexico) and S&P/BVL (Peru), from January 1, 2010 to October 27, 2021, with the exception of Mexico, we observe herding behavior during COVID-19 in businesses affiliated with business groups in MILA. In addition, from May 2020 onwards, stock behavior shifts to reverse herding. This study also reports that when the market is up herding is stronger during COVID-19. Something similar occurs for low market volatility and low volume of trading.

Keywords: herding behavior; business groups; emerging markets; covid-19; stock markets; MILA (search for similar items in EconPapers)
JEL-codes: F14 F15 F30 F36 G00 G40 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:fau:fauart:v:72:y:2022:i:3:p:222-241

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