Examination of Herding Behavior of Investment Company in Tehran Stock Exchange

Subject Areas : Financial Knowledge of Securities Analysis

مهردخت مظفری ¹ (ندارد)

Received: 2011-10-15 Accepted : 2012-01-10 Published : 2012-12-15

Keywords: herding behavior, Institutional investors, Investment Company,

Abstract :

Herd behavior is each similarity in behavior of people because of their relations.Institutional investors are among the main players of capital market and stock market,These investor’s activities on the one hand affect directly on indices, and on the otherhand on transactions of other players in the stock market. In case the transactions ofstockholders are not based on sufficient information and merely based on imitation ofother investors, herding behavior would be taken place within them. Herding is one ofthe most pervasive behaviors in financial markets which are able to explain somevolatility in the Stock Exchange. In this study, using Lakonishok (1992) methods, weconsider herding behavior amongst the investment companies of Iran stock market. Inthis method, monthly data are used for testing herding behavior. The results of thisstudy confirmed the existence of herding behavior among the managers of investmentcompanies.