Herding around the World: Do Cultural Differences Influence Investors’ Behavior?

Júlio Lobão, Joana Maio


In the last few years, culture has been found to play an important role in economic decisions. In this paper we explore the impact of cultural differences on the investors’ decision to imitate the actions of others (i.e., herding behavior). We establish a theoretical relationship between Hofstede’s cultural dimensions and the herding behavior among investors. Moreover, we test that relationship in a sample covering 39 countries in the period 2001-2013. The results suggest that cultural dimensions influence the investors’ imitative behavior since investors deciding on more masculine cultures and on cultures characterized by a higher power distance tend to be less prone to herd. The results for individualism, uncertainty avoidance and long-term orientation were found to be statistically non-significant at conventional levels. Collectively, the results highlight the importance of some features of the cultural environment on financial decision-making.


herding behavior; culture; Hofstede’s cultural dimensions; stock markets; cross-country analysis

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