Herding in financial Market: How to do it?

Remember a folk story about pied piper of Hamelin (https://en.wikipedia.org/wiki/Pied_Piper_of_Hamelin) ? Once upon a time, Hamelin town was full of rats. Yet, the pied piper has solution for this rat issue. He promised to drowned all rats and the city has to pay him 1000 golds. After mayor of Hamelin agreed, the piper played his pipe and lured the rats into Weser river, and all rats were drowned (except one rat). How? All rats HERD him because of the music. I don’t want to continue the story because it is a sad story.

This herd behavior has also occurred in the financial market. Yes, herding is the trading behavior of investor by copying the behavior of other investors. Continue reading →

Women on Board Effect: How to do it?

Women on Board research is an interesting research considering the issue of gender equality. However, the role of women in firms has not extensively and empirically discussed like other corporate governance issues. Research has found that women may change the board room situation because women are more cautious than male on board in corporate decisions making (Huang and Kisgen, 2013 and Levi et al., 2013). Laura Tyson, a former economic adviser to US President Bill Clinton, recommended the improvement of board diversity to increase firm’s financial performance through the number of women on board (Tyson, 2003). Adams and Ferreira (2009) studied 1500 companies at United States from 1996-2003, and found female directors have significant impact on corporate performance of firms with weak shareholders right. They stated that female directors are more likely to monitor their committees. As the greater the gender diversity, the directors have fewer attendance problem. Therefore, this issue should be explored more in the future
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