Global Financial Crisis, COVID-19, Lockdown, and Herd Behavior in the US ESG Leader Stocks

22 Pages Posted: 21 Jun 2021

See all articles by Ghulame Rubbaniy

Ghulame Rubbaniy

Zayed University - College of Business

Shoaib Ali

Air University - Islamabad

Costas Siriopoulos

Zayed University, College of Business; University of Patras - Business Administration

Aristeidis Samitas

Zayed University

Date Written: June 16, 2021

Abstract

Using data of the constituents of the MSCI USA ESG leader index, this study investigates the herding behavior in the US ESG stocks over the period from January 03, 2007 to September 30, 2020. Our results reveal a significant herding behavior in the US ESG leader stocks. Our findings also show that herd effect is present in the US ESG stocks during both bear and bull market conditions. Our study documents the evidence of market-wide herding during the global financial crisis, COVID-19, lockdown, and post lockdown episodes. However, in all of these cases, herding is mainly characterized by intentional motives rather than fundamental factors. Finally, the outcome of our study has important implications for the investors, portfolio managers, and policy makers as herding can result in asset mispricing, adversely affecting portfolio diversification and adding to the market inefficiency.

Keywords: ESG stocks, COVID-19, Global financial crisis, Herding behavior, Capital asset pricing model

JEL Classification: G01, G4. G11, G15, M14

Suggested Citation

Rubbaniy, Ghulame and Ali, Shoaib and Siriopoulos, Costas and Samitas, Aristeidis, Global Financial Crisis, COVID-19, Lockdown, and Herd Behavior in the US ESG Leader Stocks (June 16, 2021). Available at SSRN: https://ssrn.com/abstract=3868114 or http://dx.doi.org/10.2139/ssrn.3868114

Ghulame Rubbaniy (Contact Author)

Zayed University - College of Business ( email )

Zayed University
P.O. Box 144534
Abu Dhabi
United Arab Emirates

Shoaib Ali

Air University - Islamabad ( email )

Service Road E-9
Islamabad, 44000
Pakistan

Costas Siriopoulos

Zayed University, College of Business ( email )

P.O. Box 144534
Abu Dhabi
United Arab Emirates

University of Patras - Business Administration ( email )

Patras
Greece

Aristeidis Samitas

Zayed University ( email )

P.O. Box 4783
Abu Dhabi
United Arab Emirates

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