Over the last couple decades, more evidence has been found supporting the notion that investors are not always rational. Herding behaviors have been observed in both the stock market crash1 and financial bubbles2, which were beyond the understanding of modern finance theory. In this paper, the herding phenomenon was explored in the Chinese stock market by the study of the relationship between stock prices and trading volume over the past 7 years. It was found that the change of price is statistically significant to have caused the change of trading volume, but the reverse is not true. Theoretically, this identifies persistent herding phenomenon in the Chinese stock market. The findings provide useful investment guidance for investors and new considerations in financial reform for the government.
|Number of pages||12|
|Journal||Lingnan Journal of Banking, Finance and Economics|
|Publication status||Published - 2010|
ZHAO, X. (2010). Herding evidence in Chinese stock market : a study of the relationship between stock price index and trading volume based on behavioral finance theory. Lingnan Journal of Banking, Finance and Economics, 2, . https://commons.ln.edu.hk/cgi/viewcontent.cgi?article=1012&context=ljbfe