Herding towards pygmalion: Examining the cultural dimension of market and bank based systems.

The study aims to not only detect the presence of herd behavior in the countries studied, but also to examine the effect of cultural dimensions and market/bank-based systems on the herding behavior of financial market investors. The study employs the Cross-Sectional Standard Deviation and Cross-Sectional Absolute Deviation methods to analyze daily data from public companies traded in the capital markets in Emerging Seven and Group of Seven economies. The results suggest that being a member of E7-G7, a Future Oriented (FO), and a Performance Oriented (PO) cultures are the most important factors in explaining herd behavior.