Examination of Herding Behavior of Investment Company in Tehran Stock Exchange

Herd behavior is each similarity in behavior of people because of their relations. Institutional investors are among the main players of capital market and stock market, These investor’s activities on the one hand affect directly on indices, and on the other hand on transactions of other players in the stock market. In case the transactions of stockholders are not based on sufficient information and merely based on imitation of other investors, herding behavior would be taken place within them. Herding is one of the most pervasive behaviors in financial markets which are able to explain some volatility in the Stock Exchange. In this study, using Lakonishok (1992) methods, we consider herding behavior amongst the investment companies of Iran stock market. In this method, monthly data are used for testing herding behavior. The results of this study confirmed the existence of herding behavior among the managers of investment companies.