A Study of the Herding Effect of Chinese Open-End Funds at the Industry Level

Xianming Chen ()
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Xianming Chen: University of Sydney

A chapter in Proceedings of the 3rd International Conference on Economic Development and Business Culture (ICEDBC 2023), 2024, pp 151-157 from Springer

Abstract: Abstract In recent years there has been a growing perception among investors that there is a huddle of institutional investors in A-shares. To investigate this problem this paper applies a modification of the classical LSV model, which studies herd behaviour, to the industry level. By analyzing the data of open-end funds in various industries from March 2009 to December 2017, this paper investigates the extent and distribution characteristics of institutional investors’ herding behavior at the industry level, and explores the driving forces of herding behavior at the industry level. It is found that Chinese open-end funds indeed have significant herding behavior at the industry level. As herding behaviour in the securities market may exacerbate stock market volatility, this phenomenon deserves the attention of regulators.

Keywords: finance; herding behavior; open-end funds; investment style (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-246-0_17

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DOI: 10.2991/978-94-6463-246-0_17

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