Analyst Forecasts and Herding Behavior:

Trueman, Brett

doi:10.1093/rfs/7.1.97

Cited by 809 publications

(473 citation statements)

References 17 publications

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“…20 Two problems arise in this case. The first is to ensure that an informative equilibrium exists, for all θ ≥ 0.…”

Section: Proofmentioning

confidence: 99%

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Anti-herding and strategic consultation

Levy

2004

European Economic Review

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In this paper I analyze how careerist decision makers aggregate and use information provided by others. I find that decision makers who are motivated by reputation concerns tend to 'anti-herding', i.e., they excessively contradict public information such as the prior or others' recommendations. I also find that some decision makers may deliberately act unilaterally and not consult advisers although advice is costless.Moreover, advisers to the decision maker may not report their information truthfully.Even if the advisers care only about the outcome, they bias their recommendation since they anticipate inefficient anti-herding behavior by the decision maker.JEL Classification Numbers: D82; D83.

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“…20 Two problems arise in this case. The first is to ensure that an informative equilibrium exists, for all θ ≥ 0.…”

Section: Proofmentioning

confidence: 99%

“…19 I know of no paper in the herding/anti-herding literature that assumes differently. 20 Consider for example judicial decision making. If there is no appeal, it is likely that we never find out whether the judge is right or wrong.…”

Section: Proofmentioning

confidence: 99%

Anti-herding and strategic consultation

Levy

2004

European Economic Review

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“…If this becomes widespread practice, it can compromise a market's informational efficiency, since it will result in temporary blockades in the aggregation of information into prices (those herding are not trading on their information, hence the latter is not reflected into securities' prices) and, in the extreme, lead to informational cascades (Banerjee, 1992;Bikhchandani et al, 1992). It is also possible that investment professionals herd intentionally motivated by career/reputational payoffs (Trueman, 1994;Clement and Tse, 2005). With the performance of fund managers being assessed relatively (i.e.…”

Section: Introductionmentioning

confidence: 99%

Institutional industry herding: Intentional or spurious?

Gavriilidis

Kallinterakis

Ferreira

2013

Journal of International Financial Markets, Institutions and Mo

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The present paper aims at investigating the extent to which institutional herding at the industry level is motivated by intent or not. We assess the presence of intent using both market and sector states based on three variables (returns; volatility; volume), in order to gauge whether herding intent at the sector level is more relevant to conditions prevailing in a sector or the market as a whole. Using a unique database of quarterly portfolio holdings of Spanish funds, we produce evidence denoting that institutional herding in the Spanish market is intentional for most sectors, manifesting itself mainly during periods when the market as a whole or the specific sector under examination has underperformed, generated rising/high volatility and exhibited rising/high volume.

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“…In such situations, the employees seek to perform their duties in a way that their observable performance convinces their current and potential employers that they are better than the others, since this creates better career opportunities for them. However, in certain cases professional reputation can only be improved by imitating other financial experts' investment decisions even if the employees believe that these decisions are not optimal for their employers (Scharfstein -Stein 1990;Trueman 1994;Zweibel 1995;Prendergast -Stole 1996;Graham 1999). …”

Section: Studies Gergely Lakos -Tibor Szendreimentioning

confidence: 99%