Dissertation Defense - Okay Kıygı, PhD in Business Administration

PhD THESIS DEFENSE

Institutional Herding in Borsa Istanbul

Okay Kıygı, Ph.D. in Business Administration

Date: Wednesday, December 28, 2022

Time: 13:00

Location:  Finance Center  Altunizade Campus, Özyeğin University, İstanbul​

PhD Thesis Committee:

Prof. Dr. Atakan Yalçın, Advisor, Özyeğin University

Asst. Prof. Dr. Levent Güntay, Özyeğin Üniversity

Asst. Prof. Dr. Mehmet Satı Özsoy, Özyeğin Üniversity

Prof. Dr. Metin Ercan, Boğaziçi University

Prof. Dr. Yiğit Atılgan, Sabancı University 

Abstract:

Herding is defined as imitating the actions of other investors instead of following their own beliefs and information. It is argued that institutional investors have several reasons to herd. The theoretical explanations of herding are categorized as informational cascades, reputational and compensational herding, characteristic herding, investigative herding and fads. The herding behaviour of both domestic and foreign institutional investors is analysed in Borsa Istanbul between March 2006 and September 2018 by using the Sias (2004)‘s herding measure.

The institutional demand for stocks in the current quarter is positively correlated with the institutional demand for stocks in the previous quarter for both domestic and foreign institutional investors. This positive relation is decomposed into institutional investors following their own lag trades and institutional investors following each other into and out of the same securities (``herding'') parts. This positive relation is not caused by the characteristics herding and momentum trading strategies. The institutional demand for stocks in the current quarter has no destabilizing effect on future stock returns. The domestic institutional investors herd only in small-capitalization stocks which is interpreted as informational cascades. The foreign institutional investors herd in both small and large-capitalization stocks. The evidence of herding in large capitalization stocks is interpreted as investigative herding. The domestic institutions implement negative feedback trading strategies in large-capitalization stocks while foreign institutional investors implement positive feedback trading strategies in large-capitalization stocks.   

Bio: Okay Kıygı received his bachelor’s degree in Economics (1996) from Marmara University, İstanbul. He obtained his MBA (1986) from Koç University, İstanbul.  He is also a CFA® charterholder. He worked in Koçbank and Yapı Kredi Bank Treasury departments.  He is currently working as Treasury Manager in Türk Telekom Finansman A.Ş.