Herding transpires when an investor imitates the decision of other stockholders
or shadow market consensus (Rizzi, 2008). The Chartered Financial Analyst
Institute affirms “Herding Behavior Bias” as the principal presumption
influencing the investor’s decision. (Kunte, S.2015). Herding behavior
contradicts the validity of an Efficient Market Hypothesis (Famma and Franch,
1970). The investigation of herd behavior in the Pakistan stock market is
indispensable as the inconsistent behavior of stockholders stems from the
inefficient assets pricing and resource misallocation. The study’s result affirms
the existence of herd behavior in the stock exchange of Pakistan and contradicts
rational assets pricing model and stock price efficiency theory.
1-Samreen Fahim Babar Assistant Professor,Department of Management Sciences,Bahria University, Islamabad, Pakistan. 2-Syeda Faizaq Urooj Assistant Professor,Department of Commerce,Federal Urdu University, Islamabad, Pakistan.3-Khalid Usman Department of Management Sciences, Bahria University, Islamabad, Pakistan.