Herding behavior before and after COVID-19 pandemic: evidence from the Vietnam stock market

Abstract

Purpose

The priority of this study is to contribute to the literature by examining herding behavior at different periods of the COVID-19 pandemic. Furthermore, this study aims to investigate the herding behavior conditioned on market liquidity and information demand.

Design/methodology/approach

This study investigates herding behavior in Vietnam's stock exchanges (Ha Noi Stock Exchange and Ho Chi Minh Stock Exchange) on a sample of daily stock closing prices of 425 firms from 2018 to the first half of 2022.

Findings

The research confirms the existence of herding behavior not only for the whole but also during and post-COVID periods. These results are robust in both bull and bear markets, further confirming the influence of COVID-19 on herding in Vietnamese background. Moreover, when the authors condition exogenous factors for each period, the herding tendency is more evident at the medium market liquidity level than at high and low levels. Besides, the pandemic causes herding behavior of investors with low and medium information demand.

Research limitations/implications

These findings imply some recommendations that facilitate investors, policymakers and researchers in the context of the COVID-19 crisis.

Originality/value

The study contributes to the herding literature by examining herd behavior during the post-COVID period, suggesting the long-term impact of the health crisis. Furthermore, the research provides new evidence of herding behavior conditioned on market liquidity and information demand during different COVID sub-periods.

Citation

Nguyen, Y.V.B. and Vo, A.H.K. (2024), "Herding behavior before and after COVID-19 pandemic: evidence from the Vietnam stock market", Journal of Economic Studies, Vol. 51 No. 2, pp. 357-374. https://doi.org/10.1108/JES-01-2023-0031