Empirical Analysis Of Open-end Fund Herd Behavior

Since the first open-ended fund was issued in 2001,the open-ended funds havedeveloped very quickly,and become the most important institutional investors in thechinese stock market. The open-ended funds bring new choices of investment andcapital funds to the stock market, while there are many doubts about the existence andsignificance of its herd behavior.This paper employs the model introduced byChang,Cheng and Khorana(2000) to testify the existence of herd behavior in theopen-ended funds and gives explanation.The research shows that herd behavior doesexist in the open-ended funds,and this paper explains why herd behavior exists frominvestment belief,fund ranking and information transmission.Further more,this paperexplains why open-ended funds intensify the fluctuation of stock market and putsforward some suggestions to efficiently ward off herd behavior by analysing therealities and investment strategy of the open-ended funds.