Analysis of Herding Behavior Before and After the Removal of Broker Codes on the Indonesia Stock Exchange (IDX)

Abstract

This research aims to examine the existence of herding behavior in stock trading in Indonesia, particularly among companies included in the LQ45 index, following the Indonesian Stock Exchange policy of removing broker codes starting on December 6, 2021. The study compares two periods, namely before the removal of broker codes from June 15, 2020 to December 5, 2021, and after the removal from December 6, 2021 to June 30, 2023. The research employs the Cross-Sectional Absolute Deviation (CSAD) approach developed by Chang et al. (2000) to detect indications of herding behavior in the stock market. The findings indicate that no herding behavior occurred in LQ45 stock trading either before or after the removal of broker codes. These results suggest that investors continued to make rational investment decisions regardless of the availability of broker code information.