Herding in Analysts' Recommendations: The Role of Media
46 Pages Posted: 15 Sep 2015 Last revised: 24 Apr 2018
Date Written: April 4, 2018
This study investigates the impact of media on analysts' herding behavior when making stock recommendations. We find three main results. First, we find that analysts herd less when stocks are covered more in the media. Second, when the firm has negative media sentiment, analysts tend to herd more. Third, higher disagreement in the media is associated with a higher tendency to herd among analysts. These findings are robust to the confounding effect of news flows on returns as well as to alternative explanations. In addition, we find that the effect of media on the herding behavior is conditional on analyst characteristics.
Keywords: analyst herding, news sentiment, media coverage, disagreement, news dispersion
JEL Classification: G10, G14, G24
Suggested Citation: Suggested Citation