Herd behavior in the drybulk market: an empirical analysis of the decision to invest in new and retire existing fleet capacity

The authors examine whether investors herd in their decision to order or scrap vessels in the drybulk market. They decompose herding into unintentional and intentional, and test for herd behavior under asymmetric effects with respect to freight market states, cycle phases, risk-return and valuation profiles, and ownership of the vessel. The authors detect unintentional herd behavior during down freight markets and contractions. Furthermore, they find evidence of spill-over unintentional herding effects from the newbuilding to the scrap market. Finally, asymmetric herd effects are evident between traditional and liberal philosophy towards the ownership of the vessel, and during extreme risk-return and valuation periods.

Language

  • English

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Filing Info

  • Accession Number: 01641423
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jul 6 2017 4:27PM