Review of Financial Studies 
Vol. 23, Issue 2, February 2010, pp901-937 

  

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Narasimhan Jegadeesh; Woojin Kim 
https://doi.org/10.1093/rfs/hhp093 



Abstract 

This article 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, analysts following stocks with smaller dispersion across recommendations, and analysts who make less frequent revisions are more likely to herd.

JEL 
G20 - General 
G14 - Information and Market Efficiency; 
Event Studies; Insider Trading D83 - Search; 
Learning; Information and Knowledge; 
Communication; 
Belief; Unawareness D82 - Asymmetric and Private Information; 
Mechanism Design"