Herding in analyst earnings forecasts: evidence from the United Kingdom

Werner F. M. De Bondt and William P. Forbes*

European Financial Management, 1999, vol. 5, issue 2, 143-163

Abstract: We present an empirical analysis of herding behavior in analyst forecasts of earnings‐per‐share. Herding is defined as ‘excessive agreement’ among analyst predictions, i.e., a surprising degree of consensus relative to the predictability of corporate earnings. The data are for U.K. companies between 1986 and 1997. We examine the effects of forecast horizon and analyst coverage on forecast accuracy and dispersion. The evidence supports overoptimism, overreaction, and herding in analyst forecasts. G1, G14

Date: 1999
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