Herding where retail investors dominate trading: The case of Saudi Arabia
We investigate herding in the Saudi stock market, where more than 95% of the total trading is initiatedby the individual investors. Based on readily available stock data, we find evidence of pervasive herdingamong the market participants. Although herding is prevalent irrespective of market conditio...
| Main Authors: | , , |
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| Format: | Journal Article |
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Elsevier
2015
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| Online Access: | http://hdl.handle.net/20.500.11937/43749 |
| _version_ | 1848756795160395776 |
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| author | Rahman, A. Chowdhury, H. Sadique, Shibley |
| author_facet | Rahman, A. Chowdhury, H. Sadique, Shibley |
| author_sort | Rahman, A. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | We investigate herding in the Saudi stock market, where more than 95% of the total trading is initiatedby the individual investors. Based on readily available stock data, we find evidence of pervasive herdingamong the market participants. Although herding is prevalent irrespective of market conditions, it tendsto get stronger in periods when the market rises and the trading activity intensifies. Traders are foundto be indifferent to important stock categories in their herd behavior. Further analysis suggests that thecorrelated behavior of Saudi traders is unlikely to be induced by the common movements in fundamentals.Considering the unique composition of the market clientele, we interpret these findings as constitutingmarket level evidence supporting a commonly held belief in the literature that the individual investorsare more likely to be noise traders. |
| first_indexed | 2025-11-14T09:17:52Z |
| format | Journal Article |
| id | curtin-20.500.11937-43749 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T09:17:52Z |
| publishDate | 2015 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-437492017-09-13T13:41:45Z Herding where retail investors dominate trading: The case of Saudi Arabia Rahman, A. Chowdhury, H. Sadique, Shibley Dispersion of return Retail investors Dispersion of beta Market-wide herding Saudi stock marketa We investigate herding in the Saudi stock market, where more than 95% of the total trading is initiatedby the individual investors. Based on readily available stock data, we find evidence of pervasive herdingamong the market participants. Although herding is prevalent irrespective of market conditions, it tendsto get stronger in periods when the market rises and the trading activity intensifies. Traders are foundto be indifferent to important stock categories in their herd behavior. Further analysis suggests that thecorrelated behavior of Saudi traders is unlikely to be induced by the common movements in fundamentals.Considering the unique composition of the market clientele, we interpret these findings as constitutingmarket level evidence supporting a commonly held belief in the literature that the individual investorsare more likely to be noise traders. 2015 Journal Article http://hdl.handle.net/20.500.11937/43749 10.1016/j.qref.2015.01.002 Elsevier restricted |
| spellingShingle | Dispersion of return Retail investors Dispersion of beta Market-wide herding Saudi stock marketa Rahman, A. Chowdhury, H. Sadique, Shibley Herding where retail investors dominate trading: The case of Saudi Arabia |
| title | Herding where retail investors dominate trading: The case of Saudi Arabia |
| title_full | Herding where retail investors dominate trading: The case of Saudi Arabia |
| title_fullStr | Herding where retail investors dominate trading: The case of Saudi Arabia |
| title_full_unstemmed | Herding where retail investors dominate trading: The case of Saudi Arabia |
| title_short | Herding where retail investors dominate trading: The case of Saudi Arabia |
| title_sort | herding where retail investors dominate trading: the case of saudi arabia |
| topic | Dispersion of return Retail investors Dispersion of beta Market-wide herding Saudi stock marketa |
| url | http://hdl.handle.net/20.500.11937/43749 |