Information Cascades, Short-Selling Constraints, and Herding in Equity Markets

Loading...
Thumbnail Image

Date

2020

Authors

Tiniç, Murat
Iqbal, Muhammad Sabeeh
Mahmud, Syed F.

Journal Title

Journal ISSN

Volume Title

Publisher

Borsa İstanbul Anonim Şirketi

Open Access Color

OpenAIRE Downloads

OpenAIRE Views

Research Projects

Organizational Units

Journal Issue

Abstract

This paper examines the relationship between informed trading and herding in Borsa İstanbul. Our firm-level cross-sectional analysis asserts that informed trading can significantly increase future herding levels. Furthermore, we show that the relationship between informed trading and herding intensifies under short-selling restrictions. Our results confirm the predictions of the informational cascades framework where the individuals disregard their private information to follow others. We show that information cascades are relevant both for buy-side herding and sell-side herding. Short-selling restrictions may reinforce the herding behaviour since informed investors may not be able to clear out potential price misalignments.

Description

Keywords

Herding, Informational cascades, Informed trading, Short-selling restrictions

Turkish CoHE Thesis Center URL

Fields of Science

Citation

3

WoS Q

Q1

Scopus Q

Q1

Source

Volume

Issue

Start Page

End Page