Does individual investor trading impact firm valuation?

Wang, Qin; Zhang, Jun

doi:10.1016/j.jcorpfin.2015.08.001

Cited by 16 publications

(11 citation statements)

References 60 publications

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“…Whereas, the fourth and fifth hypotheses based on MHR hold true at the SZSE, where MHR and interaction demonstrate the positive impact on the FV. Overall findings document the influence of herding bias upon the FV, which gains support by prior literature [6,12,22]. However, the strength of relation exists insignificant during the sample period.…”

Section: Herding Bias and Firm Valuesupporting

confidence: 83%

“…Among these biases, herding bias is the main behavioral bias [4], which significantly affects the firm's performance [6,8,22]. Wang and Zhang [12] elaborate on the positive impact of investor trading on the FV.…”

Section: Hypothes (H1)mentioning

confidence: 99%

“…Conversely, Choi and Sias [11] point out the presence of a strong institutional industry herding bias. Likewise, Wang and Zhang [12] investigate the impact of individual investor trading on the firm value (FV) at the New York Stock Exchange (NYSE), and find the positive impact of investor trading on FV. European evidence [13] illustrates the presence of herding bias in the "during crises" period.…”

Section: Introductionmentioning

confidence: 99%

“…For the best of our knowledge, there is not a single study which explains the individual and interactive impact of investor and manager herding (IHR and MHR) biases on the FV. So, motivated by the recent studies [6,12,22] that manager and investor demonstrate herding bias in their investment decision, this study empirically investigates the following questions:…”

Section: Introductionmentioning

confidence: 99%

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Does Herding Bias Drive the Firm Value? Evidence from the Chinese Equity Market

et al. 2019

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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.

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Section: Herding Bias and Firm Valuesupporting

confidence: 83%

Section: Hypothes (H1)mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Does Herding Bias Drive the Firm Value? Evidence from the Chinese Equity Market

et al. 2019

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“…Investors are willing to invest in organizations that practice sustainability because they are perceived have less risk. CSR activities enhance environmental and other stakeholders' relationships that reduce the risk of company failure or loss of invested funds (Wang & Zhang, 2015). Investors also perceive organizations that have CSR strategy to be long lasting compared to ones without the strategy.…”

Section: Discussionmentioning

confidence: 99%

To Investigate the Relationship between CSR of Companies and Their Market Valuation (Equity Valuation): Northern India

Mittal¹,

Sandhu²

2018

JASRAE

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Corporate Social Responsibility (CSR) has been widely studied in the past with little success on direct impact on firm's valuation. The following research investigates the relationship between CSR of companies and their market value a case study of 20 large size companies in Northern India that are listed in National Securities Exchange (NSE). The research uses secondary data for primary analysis and applies MS Excel to analyze data. The data was collected from annual company reports and NSE website for the past 5 years. The research used CSR spending and market cap to investigate the relationship in CSR of companies and market value. The research found that CSR spending and stock valuation is positively related. The concluded that firm valuation can be increased by increasing CSR activities. The research recommends that all companies should adopt a CSR in order to increase the company market value.

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Do individual traders undermine firm valuation?

Choi

Chung

2020

Finance Research Letters

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Does individual investor trading impact firm valuation?

Cited by 16 publications

References 60 publications

Does Herding Bias Drive the Firm Value? Evidence from the Chinese Equity Market

Does Herding Bias Drive the Firm Value? Evidence from the Chinese Equity Market

To Investigate the Relationship between CSR of Companies and Their Market Valuation (Equity Valuation): Northern India

Do individual traders undermine firm valuation?

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