How ‘High’ on Herding are Cannabis Stocks?
40 Pages Posted: 13 Jan 2020
Date Written: December 22, 2019
We present the first study on investors’ behaviour in the nascent cannabis industry by examining herding among North American cannabis stocks. Canadian-listed cannabis stocks herd strongly across all market states and sectors, and for most capitalization-segments, unlike their US-listed counterparts whose herding appears more limited. Cannabis-legalization announcements rarely induce herding, while cross market herding between US- and Canadian-listed cannabis stocks is very weak. Herding is significant among US-listed Canadian cannabis stocks, yet absent among US domestic cannabis stocks. We attribute Canadian cannabis stocks’ stronger herding to their industry’s mature institutional environment that encourages investors to herd more confidently on them.
Keywords: herding; cannabis industry; retail investors; North America
JEL Classification: G15; G18; G40; G41
Suggested Citation: Suggested Citation