A Study On The Asymmetry Of Institutional Investors' Herding Behavior

Institutional investors make their investment decisions incompletely based on their private information.However,they tend to ignore their private information and follow other investors' strategies to make investment,implement the herding behavior.In addition,the herding behaviors of institutional investors are not same in different stages of the market.There is an asymmetry.There are lots of researches that studies the herding behavior of institutional investors,but few scholars focus their studies on the asymmetry of their herding behavior.This paper combines theoretical analysis with empirical analysis to study the asymmetric characteristics of institutional investors' herding behavior in order to supplement the existing theories.First,this paper discusses the causes of institutional investors' herding behavior based on previous theories.Starting from the changes of the causes,considering the dynamic influence of irrational psychological mechanism,this paper deduces the reasons for the asymmetry of their herding behavior.Secondly,combining the causes of asymmetric herding behavior with the different stages of the evolution of the market,the herding behavior mechanism of institutional investors in each stage of the market is systematically analyzed.Finally,this study conducts an empirical analysis by building an LSV model to test the characteristics of the asymmetric herding behavior of institutional investors as a whole and various types of institutional investors.Three conclusions can be drawn from the above research:(1)Information asymmetry and institutional constraints are the root causes of institutional investors' herding behavior,it is the change of these two factors and the limited rationality of institutional investors that lead to the asymmetric characteristics of their herding behavior.(2)Within the scope of this inspection,Chinese's institutional investors as a whole appears obvious herding behavior.Moreover,their herding behavior in the bull market is weaker than their herding behavior in the bear market,which proves that the institutional investor's herd behavior is asymmetric.Through further market segmentation,institutional investors in the late bear market have the highest level of herding behavior,while their herding behavior is at the weakest level in the early bull market;(3)Through the subdivision of institutional investors according to their nature,it is found that all kinds of institutional investors have herding behavior,but due to the difference in the information and institutional constraints,the asymmetry of their herding behavior appears different.Based on previous studies,this paper innovates from two aspects: market stage refinement and institutional investor differentiation.(1).The market cycle stage is further divided into four joinable stages: the early and late stages of the bull market,the early and late stages of the bear market.Which can more systematically reveals the dynamic change trend and asymmetric mechanism of institutional investor's herding behavior under different external conditions.(2).This paper classifies institutional investors according to their nature and comprehensively investigates the asymmetry degree of herding behavior of institutional investors as a whole and different kinds of institutional investors as well as the underlying causes of the differences.