Regulatory mood-congruence and herding: evidence from cannabis stocks

Panagiotis Andrikopoulos; Bartosz Gebka; Vasileios  Kallinterakis

doi:10.1016/j.jebo.2020.10.019

Regulatory mood-congruence and herding: evidence from cannabis stocks

Panagiotis Andrikopoulos, Bartosz Gebka, Vasileios Kallinterakis

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

34 Downloads (Pure)

Abstract

Although social mood can motivate herding towards new industries, the extent to which regulators cater to social mood may affect that herding. We explore this issue in the context of the nascent cannabis industry by examining herding among the cannabis stocks listed in the US and Canada, where the regulatory treatment of cannabis varies in its congruence with the prevailing social mood on cannabis’ legalization. Canadian-listed cannabis stocks entail strong herding across all market states and sectors, alongside most capitalization-segments; conversely, herding among their US-listed counterparts is relatively limited, appearing on up-market/high-volume days, for the smallest capitalization segment, as well as for several cannabis-sectors. Herding is present (almost always absent) around cannabis’ legalization announcement-days in Canada (the US), while cross market herding between US- and Canadian-listed cannabis stocks is very weak. We attribute Canadian (US) cannabis stocks’ strong (weak) herding to cannabis’ more (less) mood-congruent regulatory treatment, which promotes (reduces) certainty and encourages investors to herd more (less) on them.

Original language	English
Pages (from-to)	842-864
Number of pages	23
Journal	Journal of Economic Behavior & Organization
Volume	185
Early online date	12 Nov 2020
DOIs	https://doi.org/10.1016/j.jebo.2020.10.019
Publication status	Published - 30 Apr 2021

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Economic Behavior & Organization. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Economic Behavior & Organization, 185, (2021) DOI: 10.1016/j.jebo.2020.10.019

© 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

Cannabis industry
Herding
Mood
North America
Regulation

ASJC Scopus subject areas

Economics and Econometrics
Organizational Behavior and Human Resource Management

Access to Document

10.1016/j.jebo.2020.10.019

Post-PrintAccepted author manuscript, 1.07 MBLicence: CC BY-NC-ND

Cite this

@article{1ba5368f7da44bdba12c80fa3c7725b8,

title = "Regulatory mood-congruence and herding: evidence from cannabis stocks",

abstract = "Although social mood can motivate herding towards new industries, the extent to which regulators cater to social mood may affect that herding. We explore this issue in the context of the nascent cannabis industry by examining herding among the cannabis stocks listed in the US and Canada, where the regulatory treatment of cannabis varies in its congruence with the prevailing social mood on cannabis{\textquoteright} legalization. Canadian-listed cannabis stocks entail strong herding across all market states and sectors, alongside most capitalization-segments; conversely, herding among their US-listed counterparts is relatively limited, appearing on up-market/high-volume days, for the smallest capitalization segment, as well as for several cannabis-sectors. Herding is present (almost always absent) around cannabis{\textquoteright} legalization announcement-days in Canada (the US), while cross market herding between US- and Canadian-listed cannabis stocks is very weak. We attribute Canadian (US) cannabis stocks{\textquoteright} strong (weak) herding to cannabis{\textquoteright} more (less) mood-congruent regulatory treatment, which promotes (reduces) certainty and encourages investors to herd more (less) on them.",

keywords = "Cannabis industry, Herding, Mood, North America, Regulation",

author = "Panagiotis Andrikopoulos and Bartosz Gebka and Vasileios Kallinterakis",

note = "NOTICE: this is the author{\textquoteright}s version of a work that was accepted for publication in Journal of Economic Behavior & Organization. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Economic Behavior & Organization, 185, (2021) DOI: 10.1016/j.jebo.2020.10.019 {\textcopyright} 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ ",

year = "2021",

month = apr,

day = "30",

doi = "10.1016/j.jebo.2020.10.019",

language = "English",

volume = "185",

pages = "842--864",

journal = "Journal of Economic Behavior and Organization",

issn = "0167-2681",

publisher = "Elsevier",

}

TY - JOUR

T1 - Regulatory mood-congruence and herding: evidence from cannabis stocks

AU - Andrikopoulos, Panagiotis

AU - Gebka, Bartosz

AU - Kallinterakis, Vasileios

N1 - NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Economic Behavior & Organization. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Economic Behavior & Organization, 185, (2021) DOI: 10.1016/j.jebo.2020.10.019 © 2021, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/

PY - 2021/4/30

Y1 - 2021/4/30

N2 - Although social mood can motivate herding towards new industries, the extent to which regulators cater to social mood may affect that herding. We explore this issue in the context of the nascent cannabis industry by examining herding among the cannabis stocks listed in the US and Canada, where the regulatory treatment of cannabis varies in its congruence with the prevailing social mood on cannabis’ legalization. Canadian-listed cannabis stocks entail strong herding across all market states and sectors, alongside most capitalization-segments; conversely, herding among their US-listed counterparts is relatively limited, appearing on up-market/high-volume days, for the smallest capitalization segment, as well as for several cannabis-sectors. Herding is present (almost always absent) around cannabis’ legalization announcement-days in Canada (the US), while cross market herding between US- and Canadian-listed cannabis stocks is very weak. We attribute Canadian (US) cannabis stocks’ strong (weak) herding to cannabis’ more (less) mood-congruent regulatory treatment, which promotes (reduces) certainty and encourages investors to herd more (less) on them.

AB - Although social mood can motivate herding towards new industries, the extent to which regulators cater to social mood may affect that herding. We explore this issue in the context of the nascent cannabis industry by examining herding among the cannabis stocks listed in the US and Canada, where the regulatory treatment of cannabis varies in its congruence with the prevailing social mood on cannabis’ legalization. Canadian-listed cannabis stocks entail strong herding across all market states and sectors, alongside most capitalization-segments; conversely, herding among their US-listed counterparts is relatively limited, appearing on up-market/high-volume days, for the smallest capitalization segment, as well as for several cannabis-sectors. Herding is present (almost always absent) around cannabis’ legalization announcement-days in Canada (the US), while cross market herding between US- and Canadian-listed cannabis stocks is very weak. We attribute Canadian (US) cannabis stocks’ strong (weak) herding to cannabis’ more (less) mood-congruent regulatory treatment, which promotes (reduces) certainty and encourages investors to herd more (less) on them.

KW - Cannabis industry

KW - Herding

KW - Mood

KW - North America

KW - Regulation

UR - http://www.scopus.com/inward/record.url?scp=85095992617&partnerID=8YFLogxK

U2 - 10.1016/j.jebo.2020.10.019

DO - 10.1016/j.jebo.2020.10.019

M3 - Article

VL - 185

SP - 842

EP - 864

JO - Journal of Economic Behavior and Organization

JF - Journal of Economic Behavior and Organization

SN - 0167-2681

ER -

Regulatory mood-congruence and herding: evidence from cannabis stocks

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Panagiotis Andrikopoulos

Cite this

Regulatory mood-congruence and herding: evidence from cannabis stocks

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Profiles

Panagiotis Andrikopoulos

Cite this