References (52)


Citations (12)



Institutional Industry Herding

Nicole Y. Choi

University of Wyoming - Department of Economics and Finance

Richard W. Sias

University of Arizona - Department of Finance

August 8, 2008

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 institutional industry herding results from managers' decisions (rather than underlying investors' flows), is not fully explained by institutions following each other into and out of similar size and book to market ratio stocks, drives institutional industry momentum trading, is more pronounced in smaller and more volatile industries, and may sometimes drive industry market values from fundamental values.

Number of Pages in PDF File: 53

Keywords: herding, institutional investors

JEL Classification: G10, G12, G14

Open PDF in Browser Download This Paper

Date posted: March 24, 2008 ; Last revised: August 13, 2008

Suggested Citation

Choi, Nicole Y. and Sias, Richard W., Institutional Industry Herding (August 8, 2008). Available at SSRN: http://ssrn.com/abstract=1107491 or http://dx.doi.org/10.2139/ssrn.1107491

Contact Information

Nicole Y. Choi
University of Wyoming - Department of Economics and Finance ( email )
P.O. Box 3985
Laramie, WY 82071-3985
United States
Richard W. Sias (Contact Author)
University of Arizona - Department of Finance ( email )
McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States
Feedback to SSRN

Paper statistics
Abstract Views: 3,287
Downloads: 775
Download Rank: 22,339
References:  52
Citations:  12
Paper comments
No comments have been made on this paper

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 0.250 seconds