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July 25, 2024Central European Business ReviewOpen Access

Do Global Disruptive Events Induce Herding Behaviour during Upward and Downward Market Movements? The Evidence from Nordic and Baltic Stock Markets

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Authors

RLRenata LegenzovaGLGintarė LeckJJJustė Juknevičiūtė

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Overview

Analysis of daily stock data reveals herding behaviour during market downturns across Northern European exchanges, suggesting heightened investor panic during crises.

Key Points

  • Herding behaviour emerged during downward market movements of the pandemic across regional exchanges, while upward market movements showed no collective investor clustering.
  • The Cross-Sectional Absolute Deviation method identified investor herding across three Nordic equity markets and one Baltic exchange, analyzing daily stock return dispersions.
  • Highlights that fear drives collective conformity during severe market shocks, suggesting smaller frontier stock markets may maintain greater rationality under turmoil.

Cite This Study

Legenzova et al. (2024) studied this question.

synapsesocial.com/papers/68e5f1bfb6db643587586bd4https://doi.org/10.18267/j.cebr.375
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