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The authors examine whether herd activity promotes the efficient pricing of value-relevant information conveyed by annual earnings announcements. Using a global panel sample representing 35 countries, they find that price informativeness increases with herding effects around the time of the earnings disclosure. In addition, the positive herding-informativeness relationship is greater in countries with stronger legal systems and stronger political regimes. A series of robustness tests confirm these relationships. The study findings demonstrate that the tendency to herd plays a beneficial role in expediting information dissemination and reducing trader disagreement. This implies that this positive association is probably driven by the presence of investigative herding. [ABSTRACT FROM AUTHOR]

This paper examines whether UK fund managers engage in herding behaviour in the stock market using the dynamic herding measure, whether their herding behaviour is different during bullish and bearish periods, whether most of their herding is informational, which types of informational reasons act as the main drivers of their herding and whether there are non-informational drivers of their herding. Our results reveal that UK fund managers engage in significant herding behaviour and that this behaviour does not differ significantly from bullish to bearish stock markets. Moreover, we confirm that there are weak positive correlations between fund managers’ herding and stock returns within the subsequent year, which indicates that their herding is mainly informational. To improve portfolio performance, other investors could follow UK fund managers and purchase stocks overbought by them with at least 15 traders quarterly in the following one-year period, particularly for growth-type, sectorspecific and international-type funds. Moreover, because they are more likely to herd in large-capitalisation securities, the informational reasons driving managers’ herding behaviour are mainly related to investigative herding. We also find that growth-type and international-type funds are more likely to herd with similar- type funds. This finding may result from reputational and characteristic herding, which illustrates that non-informational reasons for managers’ herding still exist.

This paper examines whether UK fund managers engage in herding behaviour in the stock market using the dynamic herding measure, whether their herding behaviour is different during bullish and bearish periods, whether most of their herding is informational, which types of informational reasons act as the main drivers of their herding and whether there are non-informational drivers of their herding. Our results reveal that UK fund managers engage in significant herding behaviour and that this behaviour does not differ significantly from bullish to bearish stock markets. Moreover, we confirm that there are weak positive correlations between fund managers' herding and stock returns within the subsequent year, which indicates that their herding is mainly informational. To improve portfolio performance, other investors could follow UK fund managers and purchase stocks overbought by them with at least 15 traders quarterly in the following one-year period, particularly for growth-type, sectorspecific and international-type funds. Moreover, because they are more likely to herd in large-capitalisation securities, the informational reasons driving managers' herding behaviour are mainly related to investigative herding. We also find that growth-type and international-type funds are more likely to herd with similar- type funds. This finding may result from reputational and characteristic herding, which illustrates that non-informational reasons for managers' herding still exist. [ABSTRACT FROM AUTHOR]

This study examines whether herding exists among foreign institutional investors (FIIs), what is the cause of their herding, and whether both foreign and domestic institutional investors are more likely to follow their similar types in the Taiwan stock market. By testing the cross-sectional dependence for FIIs’ stocks in two adjacent months, we demonstrate that the FIIs’ cascades mainly result from their herding. We find little evidence that FIIs’ herding behavior is driven by habit investing. The momentum trading of FIIs is found to account for little of their herding. Moreover, investigative herding, rather than informational cascades is the main reason for FIIs’ herding. One of our contributions may be to find that FIIs’ cascades mainly resulting from their herding does not change in the bullish and bearish Taiwan stock market. This study further finds that FIIs and dealers are more likely to follow similar-type institutions than different-type institutions, respectively. [ABSTRACT FROM PUBLISHER]