Author(s): Ajibola Arewa*, James Ayodele Owoputi Ejianya, Scholastica Chimdiya Osuji, Emmanuel Chukwuemeka Ejianya, Olufemi A Ajose4 and Joy Ejighomegba Omorojor
In this study quantitative research design was utilized to test the herding behavior of investors in Nigerian equity market. A random technique was adopted to select the companies with sufficient observations that cover the scope of the study. In this study, stock price information from five companies is used. The data used in this analysis were gathered from www.investing.com over an 8 years period, from 2015 to 2022. The cross-sectional absolute standard deviation was determined using the data collected. It is concluded that there is market wide herding behavior of investors and when the market is up there is presence of significant herding behavior of investors. However, there is no significant herding behavior of investors when the market is down. When there is herding in the market, this suggests that the market is inefficient and as such it is recommended that there should be restriction on short sales in order to raised or increase market efficiency. Also, the efficiency of the market will likewise increase when the cost of information declines.
