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Analyst herding and firm-level investor sentiment

John Garcia ()
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John Garcia: University of North Texas

Financial Markets and Portfolio Management, 2021, vol. 35, issue 4, No 1, 494 pages

Abstract: Abstract This study examines the effect of firm-level investor sentiment derived from news articles and Twitter media content on analyst herding. The results indicate improvements (deterioration) in investor sentiment derived from news and Twitter media content lead to an increase (decrease) in analyst herding. This effect is primarily driven by media content with positive sentiment, and the effect size is magnified when the news and Twitter media content share the same sentiment polarity. Finally, the effect of firm-level investor sentiment on analyst herding is most pronounced in firms with low valuation uncertainty. By establishing a link between firm-level investor sentiment derived from news and Twitter content and analyst herding, this paper shows that analyst herding is amplified by firm-level investor sentiment, and the effect is more pronounced for firms with low valuation uncertainty.

Keywords: Financial analysts; Investor sentiment; Behavioral finance; Market efficiency (search for similar items in EconPapers)
JEL-codes: A12 G14 G41 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11408-021-00382-8

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