Thematic Review and Discussion of Research on Herd Behavior in Capital Markets: Highlighting the Gaps and Proposing Future Research Avenues

Abstract

This study is anchored to assimilate the body of knowledge on herd behavior in financial markets to understand the evolution of the subject, focal concepts, and core areas researched in the past, as well as present the agenda for future research. The data involved carefully selecting 214 research articles published from 1994 to 2023 in journals indexed in the Web of Science (WoS) database using the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework. The paper examines the evolution and growth of the subject. It performs thematic review of the top 100 most influential articles to identify six focal concepts and areas discussed in the past. The findings are synthesized into three primary themes to develop a comprehensive intellectual structure for the future. The results reveal that most studies examine equity market herding in developed countries. Additionally, theoretical and empirical studies are disconnected, resulting in a partial understanding of the determinants of herd behavior. Further, there is a dominance of empirical-based studies that are inadequate in explaining the complex herd behavior. This study makes significant academic contributions through thematic review by identifying the research gaps and developing a structured framework for future research agenda complemented with the proposed methodological approach that can be used as a reference for forthcoming research.