Work

Analysts herding: when does sentiment matter?

Year: 2018

Type: article

Abstract: Herding among analysts emerges when analysts give priority to their peers’ opinions instead of their own beliefs or information. Some circumstances may enhance or restrain this type of behaviour. We postulate that market sentiment is one of them. This article analyses the effect that investor sentiment may have on analysts’ herding behaviour in the U.K. Our results suggest that ‘easy situations’ such as analysing easy-to-value securities and releasing optimistic information at times of high market sentiment clearly reduce herding practices, whereas herding clearly increases in difficult situations when analysts have to release negative information at moments of high investor sentiment.

Source: Applied Economics

DOI: 10.1080/00036846.2018.1486999

Authors: Natividad Blasco, Pilar Corredor, Elena Ferrer

Institutions: Universidad de Zaragoza, Universidad Pública de Navarra (UPNA), Instituto de Investigación Avanzada en Empresa y Economía

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funders: Ministerio de Economía y Competitividad, Agencia Estatal de Investigación, European Social Fund

Awards: G2040743052, G425244674, G7040297810