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To be good or to be better: asset managers' attitudes towards herding

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  • Torben Lutje

Abstract

Based on a questionnaire survey this article distinguishes between herding asset managers who try to be good, and nonherding asset managers who try to be better than their competitors. It provides evidence for reputational herding and discusses herding managers' working effort, preferred sources of information and investment horizon. Additionally, their risk-taking behaviour, including their investment behaviour in short-term tournament scenarios, is analysed. It is found that herding managers assess themselves as generally more risk averse than nonherding managers, but in the tournament they are willing to take more risk. This finding is ascribable to their fear of falling out of the herd.

Suggested Citation

  • Torben Lutje, 2009. "To be good or to be better: asset managers' attitudes towards herding," Applied Financial Economics, Taylor & Francis Journals, vol. 19(10), pages 825-839.
    • Handle: RePEc:taf:apfiec:v:19:y:2009:i:10:p:825-839
    DOI: 10.1080/09603100801964404
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    1. Josef Lakonishok & Andrei Shleifer & Robert W. Vishny, 1992. "The Structure and Performance of the Money Management Industry," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992 Micr), pages 339-391.
    2. Arnswald, Torsten, 2001. "Investment Behaviour of German Equity Fund Managers - An Exploratory Analysis of Survey Data," Discussion Paper Series 1: Economic Studies 2001,08, Deutsche Bundesbank.
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    Cited by:

    1. Marina Nikiforow, 2010. "Does training on behavioural finance influence fund managers' perception and behaviour?," Applied Financial Economics, Taylor & Francis Journals, vol. 20(7), pages 515-528.
    2. Zamri Ahmad & Haslindar Ibrahim & Jasman Tuyon, 2017. "Behavior of fund managers in Malaysian investment management industry," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 9(3), pages 205-239, August.
    3. Karen Schnatterly & Scott G. Johnson, 2014. "Independent boards and the institutional investors that prefer them: Drivers of institutional investor heterogeneity in governance preferences," Strategic Management Journal, Wiley Blackwell, vol. 35(10), pages 1552-1563, October.
    4. Zamri Ahmad & Haslindar Ibrahim & Jasman Tuyon, 2017. "Institutional investor behavioral biases: syntheses of theory and evidence," Management Research Review, Emerald Group Publishing Limited, vol. 40(5), pages 578-603, May.

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