How ‘High’ on Herding are Cannabis Stocks?

52 Pages Posted: 13 Jan 2020 Last revised: 15 Jun 2020

See all articles by Panagiotis Andrikopoulos

Panagiotis Andrikopoulos

Centre for Financial and Corporate Integrity (CFCI), Coventry University

Bartosz Gebka

Newcastle University Business School

Vasileios Kallinterakis

University of Liverpool - Management School (ULMS)

Date Written: December 22, 2019

Abstract

Although social mood can motivate herding towards new industries, the extent to which regulators cater to social mood may affect that herding. We explore this issue in the context of the nascent cannabis industry by examining herding among the cannabis stocks listed in the US and Canada, where the regulatory treatment of cannabis varies in its congruence with the prevailing social mood on cannabis’ legalization. Canadian-listed cannabis stocks entail strong herding across all market states and sectors, alongside most capitalization-segments; conversely, herding among their US-listed counterparts is relatively limited, appearing on up-market/high-volume days, for the smallest capitalization segment, as well as for several cannabis-sectors. Herding is present (almost always absent) around cannabis’ legalization announcement-days in Canada (the US), while cross market herding between US- and Canadian-listed cannabis stocks is very weak. We attribute Canadian (US) cannabis stocks’ strong (weak) herding to cannabis’ more (less) mood-congruent regulatory treatment, which promotes (reduces) certainty and encourages investors to herd more (less) on them.

Keywords: herding; cannabis industry; retail investors; North America

JEL Classification: G15; G18; G40; G41

Suggested Citation

Andrikopoulos, Panagiotis and Gebka, Bartosz and Kallinterakis, Vasileios, How ‘High’ on Herding are Cannabis Stocks? (December 22, 2019). Available at SSRN: https://ssrn.com/abstract=3508297 or http://dx.doi.org/10.2139/ssrn.3508297

Panagiotis Andrikopoulos (Contact Author)

Centre for Financial and Corporate Integrity (CFCI), Coventry University ( email )

Priory Street
Coventry, CV1 5FB
United Kingdom
+44(0)247 765 7920 (Phone)

Bartosz Gebka

Newcastle University Business School ( email )

5 Barrack Road
Newcastle, Tyne and Wear NE1 4SE
United Kingdom
+44 191 208 1578 (Phone)

HOME PAGE: http://https://www.ncl.ac.uk/business-school/staff/profile/bartoszgebka.html#background

Vasileios Kallinterakis

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom

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