Herding behavior and stock market conditions

Purpose The purpose of this paper is to investigate whether market conditions have an effect on investors’ propensity herd in emerging economy’s stock market. Additionally, given the lack research Islamic behavioral finance, authors further if herding phenomenon distinct versus conventional stocks. Design/methodology/approach used daily data for period 1995–2016 according behavior model Chang et al. (2000), which relies cross-sectional absolute deviation returns. Findings reveal investors among Shariah-compliant during up and down exits with non-linear relationship return, while stocks does not exist linear nor nonlinear relationships Furthermore, whole market, only exists upmarket a return. However, significant. Moreover, results study are robust respect Asian global financial crisis. Practical implications findings useful identify associated rational irrational investors. Originality/value Most theoretical empirical studies focused developed countries. Only few paid attention markets, particularly context such as Malaysia. This fills void.