The impact of aggregate uncertainty on herding in analysts' stock recommendations |
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| Institution: | 1. University of Pescara, Italy;2. Department of Economics, Università Gabriele d’Annunzio, Viale Pindaro 42, Pescara 65127, Italy;1. Centre of Planning and Economic Research and Hellenic Open University, 11, Amerikis str. 106 72 Athens, Greece;2. Kent Business School, University of Kent, Parkwood Road, Canterbury, Kent, CT2 7PE, UK;3. Durham University Business School, Mill Hill Lane, Durham DH1 3LB, UK;1. Research Center for Management Science and Information Analytics, School of Information Management and Engineering, Shanghai University of Finance and Economics, China;2. School of Mathematical Sciences, Fudan University, China;3. Department of Statistics, School of Management, Fudan University, China;1. Department of Acc. & Finance, School of Management and Economics, Technological Educational Institute of Peloponnese, Antikalamos 241 00, Greece;2. Department of Acc. & Finance, Athens University of Economics & Business, 76 Patission Str., Athens GR10434, Greece;3. ESCA School of Management, 7, Abou Youssef El Kindy Street, BD Moulay Youssef, Casablanca, Morocco;1. Department of Economics, Eastern Mediterranean University, Famagusta, Turkish Republic of Northern Cyprus, via Mersin, 10, Turkey;2. Department of Economics, University of Pretoria, Pretoria 0002, South Africa;3. IPAG Business School, Paris, France;4. Department of Economics & Finance, Southern Illinois University Edwardsville, Edwardsville, IL 62026-1102, United States;5. Department of Finance & Economics, College of Industrial Management, King Fahd University of Petroleum & Minerals, Dhahran, Saudi Arabia |
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| Abstract: | This study examines whether aggregate uncertainty affects the herding tendency among analysts. The results show that, in addition to market risk and firm-level uncertainty, analysts' tendency to herd increases with aggregate uncertainty. These results are robust with respect to excluding common and earnings information, as well as using different measurements of consensus recommendation, risk and aggregate uncertainty. Herding among analysts is stronger when downgrading a stock. The tendency of herding clearly increases in tandem with aggregate uncertainty. The results are more prevalent for small stocks and inexperienced analysts. |
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