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Do closed-end fund investors herd?

Cui, Y. ORCID:, Gebka, B. and Kallinterakis, V. (2019) Do closed-end fund investors herd? Journal of Banking & Finance, 105. pp. 194-206. ISSN 0378-4266

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To link to this item DOI: 10.1016/j.jbankfin.2019.05.015


We provide the first investigation of herding among closed-end fund investors, drawing on the US closed- end fund market for the 1992–2016 period. Results suggest closed-end fund investors herd significantly, with their herding being mainly driven by non-fundamentals. Closed-end fund herding rises in eco- nomic/market uncertainty, with its significance being mainly concentrated in the post-2007 period. Herd- ing among closed-end funds is strongly motivated by discounts, is more pronounced than that among their net asset values and tends to grow inversely with fund-size. The fact that closed-end fund herding is noise-driven and linked to their discounts raises the possibility that it is related to the noise trader risk attributed to closed-end funds by investor sentiment theory.

Item Type:Article
Divisions:Henley Business School > ICMA Centre
ID Code:101896

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