China's Securities Investors Follow The Herd Behavior Of Star Fund Research

Herd Behavior is a key concept of behavioral finance. It refers to certain behavior of individual investors who, influenced by public opinion or other investors'decision under a situation of information asymmetry, give up their own judgment and information to follow up other people's behavior.For many years, herd behavior has been intensively studied by scholars around the world. The studies include the categories of herd behaviors, the causality, related empirical studies, and the methods of empirical study conducting, etc. All these have established a relatively integrated study framework. But among the causality study, there may be one thing missing, the pursuit of above-average profit, one of the most direct and obvious reasons for herd behavior in investment decision making.With this concern, this thesis mainly studies the following-up of common Chinese investors after the trading operations conducted by starring funds. The whole text consists of five chapters:The first chapter introduces the background of this study, its study method and its add-in of related study. Literature review is also given in this chapter. The second chapter analyses the theoretical causes of herd behavior after the starring funds. The third chapter makes an empirical test about the possibility of above average profit made by following up the operation of starring funds. The fourth chapter further explores the negative effects of these following-up behaviors. The last chapter obtains the conclusions, and gives the related policy recommendations.The main conclusions of this thesis are made as follows:1,It is a shortcut for above-average profit for small investors to follow up the operation of starring funds within an uncertain and information asymmetric environment.2,Empirical test shows that considerable scale of above average profit can been made by small investors by following up the trading operations of starring funds. The overall investment return of the followers' portfolio that we have constructed, with more than five years, has reached 880%, far above the return rate of 227% if the investment is made after CSI 300 Index stocks. This explains the reason why so many small investors in Chinese stock market are following up the operation of starring funds.3,The following-up behavior of small investors would bring many negative side effects to the starring funds and even to the whole equity market. Hence related supervision should be made by regulation authorities.