Herd behaviour in buyout investments

Buchner, Axel; Mohamed, Abdulkadir; Schwienbacher, Armin

doi:10.1016/j.jcorpfin.2019.101503

Cited by 10 publications

(5 citation statements)

References 41 publications

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“…In addition, institutional investors also use LPE as a complement to their traditional (unlisted) private equity investment strategy (Huss and Zimmermann, 2012). Moreover, institutional investors often herd (Lakonishok et al , 1992; Buchner et al , 2020), i.e. they invest in similar assets at the same time, which leads to similar strategies and thus similar outcomes.…”

Section: Resultsmentioning

confidence: 99%

Modeling the volatilities of globally listed private equity markets

Tegtmeier

2022

SEF

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Purpose This paper aims to analyze the characteristics of stochastic volatility processes in globally listed private equity (LPE) markets, which are represented by nine global, regional and style indices, and reveals transmissions in the conditional variances between the different markets, based on weekly data covering the period January 2011 to December 2020. Design/methodology/approach The study uses the generalized autoregressive conditional heteroscedasticity [GARCH(p, q)] model and its exponential GARCH (EGARCH) and GARCH-in-mean extensions. Findings The estimates of the volatility models GARCH, EGARCH and GARCH-in-mean GARCH-M for testing the stylized properties persistence, asymmetry, mean reversion and risk premium lead to very different results, depending on the respective LPE index. Practical implications The knowledge of conditional volatilities of LPE returns as well as the detection of volatility transmissions between the different LPE markets under investigation serve to support asset allocation decisions with respect to risk management or portfolio allocation. Hence, the findings are important for all kinds of investors and asset managers who consider investments in LPE. Originality/value The authors present a novel study that examines the conditional variance for globally LPE markets by using LPX indices, offering valuable insight into this growing asset class.

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Section: Resultsmentioning

confidence: 99%

Modeling the volatilities of globally listed private equity markets

Tegtmeier

2022

SEF

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“…Firms should pay more attention to peer effects in capital structure and become more cautious with their imitation in capital structure adjustments because peer effects in capital structure will affect corporate development. Some prior studies on peer effects in firms'financial decisions have concluded that peer effects are beneficial for firms because they can help obtain more information and experience from peers (Buchner et al, 2020;Tian et al, 2021), while others argue that it is detrimental because firms might imitate their peers without considering their characteristics.…”

Section: Discussionmentioning

confidence: 99%

Peer effects and the mechanisms in corporate capital structure: Evidence from Chinese listed firms

Liu

Xie

et al. 2023

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Research background: Peer effects, in which individuals learn and imitate their peers? behaviors, have been widely recognized in different contexts. Particularly, with increasingly fierce competition, firms can no longer make financial decisions in isolation when facing terrible external operational environments. In contrast, observing peers? actions in corporate policies can help reveal intentions regarding what peers are doing, which is vital for policymakers and financial managers. Studies on the existence of capital structure peer effects in the Chinese context have been conducted, but the mechanisms of peer effects are still ambiguous at present. Purpose of the article: This study aims to examine peer effects in capital structure and discover the mechanisms in the Chinese context. Understanding the mechanisms behind peer effects can help scholars and policymakers obtain more insights into the working mechanisms of peer effects. Furthermore, how the industry- and firm-specific characteristics affect peer effects and the selection of mechanisms should be analyzed. Methods: Using the fixed effects model (industry effect and year effect) and propensity score matching (PSM), as well as market leverage and heterogeneous stock shocks, we investigate peer effects, the mechanisms, and the effects of specific factors from industries and firms based on the sample of Chinese non-financial A-share listed firms on the Shanghai and Shenzhen stock markets from 2014 to 2021. Findings & value added: Study results show that peer effects exist in the corporate capital structure in the Chinese capital markets. Unlike previous studies, this analysis captures three mechanisms: the industrial average, industrial leaders, and industrial-similar firms. The intensity of peer effects and selection of mechanisms are influenced by both industry-specific characteristics (the degree of industrial competition and financing constraints) and firm-specific characteristics (firm size and market share).

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“…This may be due to increased demand for assets within that industry, which can drive up prices and boost gains in short period of time. Buchner et al (2019), similarly Sehgal and Jain (2015) talked the momentum effect, proposing its origin in both behavioural and rational sides. The Indian stock market exhibits a momentum effect that traditional risk models fail to summarize fully, hinting at behavioural factors.…”

Section: Behavioural Factors In Financementioning

confidence: 99%

Exploring the Nexus of Capital Market and Investor Behaviour: A Systematic Literature Review

Gokhale,

Mittal

2024

IJEFI

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This review paper delves into the intricate interplay between capital markets, investor protection, portfolio strategies, and behavioural aspects in investments. The VOSviewer 1.6.19 software is utilised to perform a bibliometric analysis and a exhaustive systematic literature review on a sample of 248 papers published in journals in Web of Science databases. Our comprehensive analysis reveals the emergence of key themes, shedding light on the critical role of behavioural finance in shaping investment choices and outcomes. We explore how investor behaviour often deviates from traditional models of market efficiency and how these deviations impact portfolio construction and investment strategies. Our paper contributes to a deeper comprehension of the complexities that drive investment decisions and helps academics, society, investors, and regulators by providing a structured analysis of literature strands. Builds a basis for better regulation and protection of investors in the capital markets, with relevant information for future studies on investor behaviour.

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Herd behaviour in buyout investments

Cited by 10 publications

References 41 publications

Modeling the volatilities of globally listed private equity markets

Modeling the volatilities of globally listed private equity markets

Peer effects and the mechanisms in corporate capital structure: Evidence from Chinese listed firms

Exploring the Nexus of Capital Market and Investor Behaviour: A Systematic Literature Review

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