Do Analysts Herd? An Analysis of Recommendations and Market Reactions

Narasimhan Jegadeesh and Woojin Kim (woojinkim@snu.ac.kr)

No 12866, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops and implements a new test to investigate whether sell-side analysts herd around the consensus when they make stock recommendations. Our empirical results support the herding hypothesis. Stock price reactions following recommendation revisions are stronger when the new recommendation is away from the consensus than when it is closer to it, indicating that the market recognizes analysts' tendency to herd. We find that analysts from larger brokerages and analysts following stocks with smaller dispersion across recommendations are more likely to herd.

JEL-codes: G14 G24 (search for similar items in EconPapers)
Date: 2007-01
New Economics Papers: this item is included in nep-cfn
Note: AP
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Citations: View citations in EconPapers (4)

Published as Narasimhan Jegadeesh & Woojin Kim, 2010. "Do Analysts Herd? An Analysis of Recommendations and Market Reactions," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 23(2), pages 901-937, February.

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Journal Article: Do Analysts Herd? An Analysis of Recommendations and Market Reactions (2010)
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