An Empirical Evaluation of Analysts' Herding Behavior Following Regulation Fair Disclosure

40 Pages Posted: 10 Jan 2007

See all articles by Yaw M. Mensah

Yaw M. Mensah

Rutgers Business School - Newark & New Brunswick

Rong Yang

Rochester Institute of Technology

Date Written: January 2007

Abstract

This study examines whether analysts' forecast revisions exhibited increased herding behavior following the adoption of Regulation Fair Disclosure. A recent model by Arya, Mittendorf, and Narayanamoorthy (2005) projects that one potential consequence of Regulation Fair Disclosure might be increased herding by financial analysts, although previous studies examining the economic consequences of Regulation FD have not found any averse consequence for investors. We examine financial analysts forecasting behavior before and after the adoption of Regulation FD in order to test the Arya et al. model. Our general finding is that increased herding behavior cannot be detected among either the firms most directly impacted by Regulation FD (those which used to hold closed press conferences), or those least affected (firms that used to hold open press conferences or did not hold them).

Keywords: Regulation Fair Disclosure, Herding Behavior, Earnings Forecasts, Corporate Disclosures

JEL Classification: M41, M45, G10, G14, G29, G38

Suggested Citation

Mensah, Yaw M. and Yang, Rong, An Empirical Evaluation of Analysts' Herding Behavior Following Regulation Fair Disclosure (January 2007). Available at SSRN: https://ssrn.com/abstract=955694 or http://dx.doi.org/10.2139/ssrn.955694

Yaw M. Mensah (Contact Author)

Rutgers Business School - Newark & New Brunswick ( email )

100 Rockafeller Road
Piscataway, NJ 08854
United States
848.445.4369 (Phone)
732.445.0351 (Fax)

HOME PAGE: http://business.rutgers.edu

Rong Yang

Rochester Institute of Technology ( email )

Saunders College of Business
Rochester Institute of Technology
Rochester, NY 14623
United States

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