Herding in Analysts' Recommendations: The Role of Media

46 Pages Posted: 15 Sep 2015 Last revised: 24 Apr 2018

See all articles by Bart Frijns

Bart Frijns

Auckland University of Technology - Faculty of Business & Law

Thanh D. Huynh

Monash University - Department of Banking and Finance

Date Written: April 4, 2018

Abstract

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

Frijns, Bart and Huynh, Thanh Duc, Herding in Analysts' Recommendations: The Role of Media (April 4, 2018). Journal of Banking and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2660180 or http://dx.doi.org/10.2139/ssrn.2660180

Bart Frijns

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

Thanh Duc Huynh (Contact Author)

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

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