We examine the role of institutional investors underlying post-earnings-announcement drift (PEAD). Our results show that while institutional investors generally herd on earnings news, such correlated trading among institutions does not eliminate or reduce market underreaction to earnings...

This study investigates how investor trading behavior affects audit pricing by examining mutual fund herding in specific. When mutual fund managers herd due to information cascade, mimicking incentive, or agency problem, it causes information friction and weakens their monitoring effectiveness....