Investigation of herding behaviour in developed and developing countries: does country governance factor matters?

Investigation of herding behaviour in developed and developing countries: does country governance factor matters?

Although numerous studies have been conducted on herding behaviours, only a limited number has focused on the governance factor that may influence herding activity. This paper examines whether countries’ governance influences herding decisions among investors. Applying the cross-sectional absolu...

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Main Authors: Mohd Nasarudin, Ahmad Fawwaz, Amin Noordin, Bany Ariffin Amin, Law, Siong Hook, Yahya, Mohd Hisham
Format: Article
Language:English
Published: Malaysian Finance Association 2017
Subjects:
HG4501 Stocks, investment, speculation
Online Access:http://irep.iium.edu.my/65958/
http://irep.iium.edu.my/65958/1/MY%20PAPER-CAPITAL%20MARKET%20REVIEW.pdf
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author Mohd Nasarudin, Ahmad Fawwaz
Amin Noordin, Bany Ariffin Amin
Law, Siong Hook
Yahya, Mohd Hisham
author_facet Mohd Nasarudin, Ahmad Fawwaz
Amin Noordin, Bany Ariffin Amin
Law, Siong Hook
Yahya, Mohd Hisham
author_sort Mohd Nasarudin, Ahmad Fawwaz
building IIUM Repository
collection Online Access
description Although numerous studies have been conducted on herding behaviours, only a limited number has focused on the governance factor that may influence herding activity. This paper examines whether countries’ governance influences herding decisions among investors. Applying the cross-sectional absolute deviation (CSAD) method on data from 60 countries, the results on herding estimation based on the country level segmented into three panels reveal that the strict governance would help to minimize herding activity. Among countries with strict governance, only six report herding activity. However, the results show that herding activity is reported more often in countries with moderate or weak governance. Our results also suggest that herding activity will be practiced more in the country where the information dissemination is less efficient due to its less-strict governance level.
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format Article
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institution International Islamic University Malaysia
institution_category Local University
language English
last_indexed 2025-11-14T17:09:44Z
publishDate 2017
publisher Malaysian Finance Association
recordtype eprints
repository_type Digital Repository
spelling iium-659582018-10-25T03:56:09Z http://irep.iium.edu.my/65958/ Investigation of herding behaviour in developed and developing countries: does country governance factor matters? Mohd Nasarudin, Ahmad Fawwaz Amin Noordin, Bany Ariffin Amin Law, Siong Hook Yahya, Mohd Hisham HG4501 Stocks, investment, speculation Although numerous studies have been conducted on herding behaviours, only a limited number has focused on the governance factor that may influence herding activity. This paper examines whether countries’ governance influences herding decisions among investors. Applying the cross-sectional absolute deviation (CSAD) method on data from 60 countries, the results on herding estimation based on the country level segmented into three panels reveal that the strict governance would help to minimize herding activity. Among countries with strict governance, only six report herding activity. However, the results show that herding activity is reported more often in countries with moderate or weak governance. Our results also suggest that herding activity will be practiced more in the country where the information dissemination is less efficient due to its less-strict governance level. Malaysian Finance Association 2017 Article PeerReviewed application/pdf en http://irep.iium.edu.my/65958/1/MY%20PAPER-CAPITAL%20MARKET%20REVIEW.pdf Mohd Nasarudin, Ahmad Fawwaz and Amin Noordin, Bany Ariffin Amin and Law, Siong Hook and Yahya, Mohd Hisham (2017) Investigation of herding behaviour in developed and developing countries: does country governance factor matters? Capital Market Review, 25 (2). pp. 1-14. ISSN 1823-4445 http://www.mfa.com.my/wp-content/uploads/2017/12/vol252_pp.01-14-Nasarudin-et-al..pdf
spellingShingle HG4501 Stocks, investment, speculation
Mohd Nasarudin, Ahmad Fawwaz
Amin Noordin, Bany Ariffin Amin
Law, Siong Hook
Yahya, Mohd Hisham
Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
title Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
title_full Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
title_fullStr Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
title_full_unstemmed Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
title_short Investigation of herding behaviour in developed and developing countries: does country governance factor matters?
title_sort investigation of herding behaviour in developed and developing countries: does country governance factor matters?
topic HG4501 Stocks, investment, speculation
url http://irep.iium.edu.my/65958/
http://irep.iium.edu.my/65958/
http://irep.iium.edu.my/65958/1/MY%20PAPER-CAPITAL%20MARKET%20REVIEW.pdf

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