Gender and Herding

Abstract

This study uses a unique dataset from a large anonymous brokerage firm to examine the herding behavior of Chinese individual investors. The empirical evidence reveals that females are more inclined to follow the behavior of ‘same-sex’ investors. Market conditions and stock characteristics affect females and males similarly in that individual investors herd more intensively in the bull market, on stocks with better liquidity and larger market capitalization. We find female investors generally yield lower returns than males when they herd intensively, and this finding is more pronounced during a bull-market period. Outcomes from individual- level herding measurements suggest that portfolio turnover drives the difference in herding between genders.

Keywords: Herding, Individual investors, Chinese stock markets, Gender

JEL Classification: G11, G14