Does herding bias drive the firm value? Evidence from the Chinese equity market

Sayyed Sadaqat Hussain Shah, Muhammad Asif Khan, Natanya Meyer, Daniel F. Meyer, Judit Oláh

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)


Equity markets play a pivotal role in the sustainability of developing countries, such as China. The literature on the detection of herding biases is confined to the aggregate level (firms, sector/industry and market). The present study adds to the behavioral finance literature by addressing the surprisingly unnoticed phenomena of the behavioral impact of herding bias on firm value (FV) at the firm level, using the sample of A-Shares listed firms at the Shanghai and Shenzhen Stock Exchanges (SSE and SZSE) under panel fixed effect specification. Initially, we detect the existence of investors and managers herding (IHR and MHR) biases at firm-level, and later, we examine their impact (distinct and interactive) upon the FV. The empirical results document the presence of IHR and MHR bias at market, sector and firm-level in both equity markets, which potentially drive the FV, while the impact is more pronounced during the extreme trading period. The findings are robust under different time intervals, and industry classification, therefore, offers useful policy implications to understand the behavioral dynamics of investors and managers.

Original languageEnglish
Article number5583
Issue number20
Publication statusPublished - 1 Oct 2019
Externally publishedYes


  • Firm value
  • Investor herding bias
  • Manager herding bias
  • Shanghai stock exchange
  • Shenzhen stock exchange

ASJC Scopus subject areas

  • Computer Science (miscellaneous)
  • Environmental Science (miscellaneous)
  • Geography, Planning and Development
  • Energy Engineering and Power Technology
  • Hardware and Architecture
  • Management, Monitoring, Policy and Law
  • Computer Networks and Communications
  • Renewable Energy, Sustainability and the Environment


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