Please use this identifier to cite or link to this item: http://hdl.handle.net/2381/36095
Title: Close Communications: Hedge Funds, Brokers and the Emergence of Herding
Authors: Kellard, Neil
Millo, Yuval
Simon, Jan
Engel, Ofer
First Published: 9-Mar-2016
Publisher: Wiley for British Academy of Management
Citation: British Journal of Management, 2016, doi:10.1111/1467-8551.12158
Abstract: We examine how communication, evaluation and decision-making practices among competing market actors contribute to the establishment of herding and whether this has impact on market-wide phenomena such as prices and risk. Data are collected from interviews and observations with hedge fund industry participants in Europe, the USA and Asia. We examine both contemporaneous and biographical data, finding that decision-making relies on an elaborate two-tiered structure of connections among hedge fund managers and between them and brokers. This structure is underpinned by idea sharing and development between competing hedge funds leading to ‘expertise-based’ herding and an increased probability of over-embeddedness. We subsequently present a case study demonstrating the role that communication between competing hedge funds plays in the creation of herding and show that such trades affect prices by introducing an additional risk: the disregarding of information from sources outside the trusted connections.
DOI Link: 10.1111/1467-8551.12158
ISSN: 1045-3172
eISSN: 1467-8551
Links: http://onlinelibrary.wiley.com/doi/10.1111/1467-8551.12158/abstract
http://hdl.handle.net/2381/36095
Embargo on file until: 9-Mar-2018
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Copyright © British Academy of Management, 2016. All rights reserved.
Description: The file associated with this record is under a 24-month embargo from publication in accordance with the publisher's self-archiving policy, available at http://olabout.wiley.com/WileyCDA/Section/id-820227.html. The full text may be available through the publisher links provided above.
Appears in Collections:Published Articles, School of Management

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