Industry Based on Style Investing and Retail Investors

Document Type : Research Paper


1 Ph.D. Student in Accounting, Faculty of Administrative & Economic Sciences, University of Isfahan, Isfahan, Iran

2 Associate Prof. in Accounting, Faculty of Administrative & Economic Sciences, University of Isfahan, Isfahan, Iran

3 Associate Prof. in Economy, Faculty of Administrative & Economic Sciences, University of Isfahan, Isfahan, Iran


Style investing has been developed in behaviral finance literature. In style investing, the investors first classify the investment options based common attribute and then buy their target asset from the selected group. This common attribute is called "style". In this research, the use of "industry" as a style in "style investing" has been survied. Correlation of  retail investors transactions at the industry level was investigated by controlling variables of size and book value to market value. In order to test the research hypotheses, a sample of 8 milions transactions related to 335 firms was selected through a systematic elimination from the listed firms in the Tehran Stock Exchange between 2008 and 2014. The results showed that industry is used as a "style" by retail investors. In addition, the use of size and book value as a "style" was observed.


Main Subjects

Ahmadi, R., & Sinaei, H. (2015). Herding Behavior in 5 Industries in TSE. International Conference on 21Century Management. (in Persian)
Barberis, N., & Shleifer, A. (2003). Style investing. Journal of Financial Economics, 68(2), 161–199. doi:10.1016/S0304-405X(03)00064-3.
Choi, N., & Sias, R. W. (2009). Institutional industry herding. Journal of Financial Economics, 94(3), 469–491. doi:10.1016/j.jfineco.2008.12.009.
Christie, W. G., & Huang, R. D. (1995). Following the Pied Piper: Do Individual Returns Herd around the Market? Financial Analysts Journal, 51(4), 31–37.
Demirer, R., Lien, D., & Zhang, H. (2015). Industry herding and momentum strategies. Pacific-Basin Finance Journal, 32, 95–110.
Fama, E. F., & French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33(1), 3–56. doi:10.1016/0304-405X(93)90023-5.
Foroughi, D., & Ahmadi, N. (2011). Shareholders Type & Accruals Quality in TSE. Iranian Journal of Accounting Research, 2(5), 90-103. (in Persian)
Ganesh, R., Naresh, G., & Thiyagarajan, S. (2016). Industry herding behaviour in Indian stock market. American J. of Finance and Accounting, 4(3/4), 284. doi:10.1504/AJFA.2016.080734.
Gavriilidis, K., Kallinterakis, V., & Ferreira, M. P. L. (2013). Institutional industry herding: Intentional or spurious? Journal of International Financial Markets, Institutions and Money, 26, 192–214. doi:10.1016/j.intfin.2013.05.008.
Hasas Yegane, Y. (2006). Corporate Governance Theoretical Framework. Iranian Journal of Accountant, 20(1), 10-13. (in Persian)
Izadinia, N., & Hajian Nezhad, A. (2009). Review and Examine the Herd Behavior in Selected Industries in Tehran Stock Exchange. Iranian Journal of Securities Exchange, 2(7), 105-132. (in Persian)
Jahangiri Rad, M., Marfou, M., & Salimi, M. (2014). Investigation of Herding Behavior in Tehran Stock Exchange. Iranian Journal of Empirical Studies in Financial Accounting, 11 (42), 139-156. (in Persian)
Jame, R., & Tong, Q. (2014). Industry-based style investing. Journal of Financial Markets, 19(0), 110–130. doi:10.1016/j.finmar.2013.08.004.
Lee, C.-C., Chen, M.-P., & Hsieh, K.-M. (2013). Industry herding and market states: evidence from Chinese stock markets. Quantitative Finance, 13(7), 1091–1113. doi:10.1080/14697688.2012.740571.
Li, W., Rhee, G., & Wang, S. S. (2016). Differences in herding: Individual vs. institutional investors. Pacific-Basin Finance Journal. doi:10.1016/j.pacfin. 2016.11.005.
Molchanov, A., & Stangl, J. (2013). Investor Sentiment and Industry Returns. Presented at the New Zealand Finance Colloquium.
Mozaffari, M. (2012). Examination of Herding Behavior of Investment Company in Tehran Stock Exchange. Iranian Journal of Financial Knowledge of Securities Analysis, 5(15), 69-81. (in Persian)
Nardy, A., & Famá, R. (2013). Behavioral Finance from 2001 to 2012: Concepts, Themes and Academic Production. International Journal of Humanities and Social Science, 3(19), 233–246.
Pourzamani, Z. (2012). Appraising the Herding Behavior on Institutional Investors with Christie and Huang Model in Tehran Stock Exchange. Iranian Journal of Investing Knowledge, 1(3), 147-160. (in Persian)
Rong, W. (2013). Equity Style Investing (Thesis). Durham University. Retrieved from‎
Santi, C., & Zwinkels, R. C. J. (2017). Exploring Style Herding by Mutual Funds. Retrieved from‎.
Sarlak, A., & Taleyi., Z. (2017). Volatility of Big Firms & Herding Behavior in TSE. International Conference on 21Century Management. (in Persian)
Sias, R. W. (2004). Institutional Herding. Review of Financial Studies, 17(1), 165–206. doi:10.1093/rfs/hhg035.
Yan, Z., Zhao, Y., & Sun, L. (2012). Industry Herding and Momentum. The Journal of Investing, 21(1), 89–96. doi:10.3905/joi.2012.21.1.089.