Analyst Target Price Revisions and Institutional Herding

35 Pages Posted: 29 Jul 2022

See all articles by Chen Gu

Chen Gu

Shanghai Business School - Research Center of Finance

Xu Guo

Shenzhen University - College of Economics

Chengping Zhang

George Fox University

Date Written: July 25, 2022

Abstract

We document that institutional herding behavior is associated with analyst target price revisions even after controlling for the effects of analyst recommendations and earnings forecasts, and provide insights into the price impact of institutional herding. Institutional investors tend to buy the same stocks following an upward target price revision and sell the same stocks following a downward price revision. Moreover, institutional investors tend to overreact to analysts’ target price revisions, which exacerbates the mispricing in the stock market. Such price destabilizing effect is particularly pronounced for herding among investment firms.

Keywords: Institutional investor; Herding; Analyst target price revision; Price impact

JEL Classification: G02, G11, G14, G20, G40

Suggested Citation

Gu, Chen and Guo, Xu and Zhang, Chengping, Analyst Target Price Revisions and Institutional Herding (July 25, 2022). International Review of Financial Analysis, Volume 82, July 2022, 102189 , Available at SSRN: https://ssrn.com/abstract=4172319

Chen Gu

Shanghai Business School - Research Center of Finance ( email )

Shanghai
China

Xu Guo (Contact Author)

Shenzhen University - College of Economics ( email )

5th Floor, Wenke Building
3688 Nanhai Road
Shenzhen, Guangdong 518060
China

Chengping Zhang

George Fox University ( email )

414 N. Meridian Street
Newberg, OR 97132
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
162
Abstract Views
622
Rank
376,919
PlumX Metrics