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Do investors herd under global crises? A comparative study between Chinese and the United States stock markets

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  • Xing, Shuo
  • Cheng, Tingting
  • Sun, Shuanglin

Abstract

This paper investigates the impact of two global crises, the global financial crisis and the COVID-19 crisis, on herding behavior in the Chinese and U.S. stock markets. We find no evidence of herding behavior during these two global crises in the U.S. stock market, yet significant herding emerges under the COVID-19 crisis in Chinese mainland stock market. Additionally, the observed herding behavior in mainland China is primarily driven by sentiment. Our results reveal and explain the differences in the effects of financial crisis and public health crisis on herding behavior, as well as variations between emerging and developed stock markets.

Suggested Citation

  • Xing, Shuo & Cheng, Tingting & Sun, Shuanglin, 2024. "Do investors herd under global crises? A comparative study between Chinese and the United States stock markets," Finance Research Letters, Elsevier, vol. 62(PA).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pa:s1544612324001508
    DOI: 10.1016/j.frl.2024.105120
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    1. Wang, Haoyu & Zhang, Yan, 2024. "Social trust, audit quality and institutional investor herd behaviour," Finance Research Letters, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Global crisis; Herding behavior; Stock markets;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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