Herding Behavior by Gambling Preference in the Chinese Stock Market: Does Covid-19 Pandemic Matter?

This study is unique because it analyzes the herding behaviors by gambling preference in the Chinese stock market from 1991 to 2021, especially during the Covid-19 pandemic. The sample includes 5,163,421 firm-month observations from 1,638 listed companies in China. We employ cross-data absolute deviation to examine herding behaviors in uptrend and downtrend markets. Our results detect the persistence of herding behaviors in the bull market only. Our findings also indicate herding behaviors by gambling preference in a downtrend period. Finally, our findings show that herding behaviors disappear in China during the pandemic. This study contributes practical implications for policymakers to enhance market efficiency. Policymakers should monitor stock price manipulation to protect individual investors in emerging markets.