How do analysts deal with hard-to-value firms? Evidence of herding

• Natividad Blasco ^[1] ; Pilar Corredor ^[2] ; Elena Ferrer ^[2]
  1. [1] Universidad de Zaragoza

     Universidad de Zaragoza

     Zaragoza, España

     
  2. [2] Universidad Pública de Navarra

     Universidad Pública de Navarra

     Pamplona, España

     
• Localización: Revista española de financiación y contabilidad, ISSN 0210-2412, Vol. 45, Nº 3, 2016, págs. 327-344
• Idioma: inglés
• DOI: 10.1080/02102412.2016.1172196
• Títulos paralelos:
  • ¿Cómo se enfrentan los analistas a las empresas difíciles de valorar? Evidencia de comportamiento imitador
• Texto completo no disponible (Saber más ...)
• Resumen
  • español

    El presente trabajo estudia cómo afecta la dificultad de valorar una empresa al comportamiento imitador de los analistas. Predecimos que los analistas tenderán a seguir el consenso en mayor medida en aquellas empresas y/o momentos temporales cuya valoración sea más subjetiva y por tanto, más difícil de realizar; es decir, en empresas y situaciones en las que su tarea de analista sea más difícil de llevar a cabo. Los resultados avalan estas hipótesis puesto que se observa que cuando la incertidumbre que rodea la valoración de una empresa es mayor, los analistas tienden a imitarse más que cuando tienen más certeza sobre el resultado de la empresa. Esta conducta imitadora se hace evidente especialmente en los momentos en los que la previsión de beneficios del analista puede transmitir información desfavorable o más pesimista sobre la empresa. Este comportamiento queda oculto cuando se analiza el conjunto de empresas en global.

  • English

    This paper examines the effects on analyst herding when firms are difficult to value. We predict that herding behaviour by financial analysts will be more likely to appear in association with firms and/or times requiring more subjective valuation, making the task of the analyst more complicated. This hypothesis is supported by the observation of a stronger tendency for analysts to herd in the presence of uncertainty versus certainty regarding the firm’s valuation. Herding behaviour is particularly evident at times when analysts’ earnings forecasts may convey unfavourable or pessimistic news about the firm. Such behaviour does not manifest itself in an overall analysis.

• Referencias bibliográficas
  • M.Baker, & J.Wurgler, (2006). Investor sentiment and the cross-section of stock returns. The Journal of Finance, 61(4), 1645–1680. doi:10.1111/j.1540-6261.2006.00885.x
  • M.Balboa, J.C.Gómez-Sala, & G.Lopez-Espinosa, (2008). Does the value of recommendations depend on the level of optimism? A country-based...
  • D.Bernhardt, M.Campello, & E.Kutsoati, (2006). Who herds? Journal of Financial Economics, 80, 657–675. doi:10.1016/j.jfineco.2005.07.006
  • M.Brennan, (1993). Agency and asset prices (Finance Working Paper No. 6-93). Los Angeles, CA:UCLA Anderson Graduate School of Management.
  • Q.Chen, & W.Jiang, (2006). Analysts’ weighting of private and public information. Review of Financial Studies, 19(1), 319–355. doi:10.1111/1468-036X.00207
  • M.B.Clement, & S.Y.Tse, (2005). Financial analyst characteristics and herding behavior in forecasting. TheJournal of Finance, 60(1), 307–341....
  • W.F.M.De Bondt, & W.P.Forbes, (1999). Herding in analyst earnings forecasts:Evidence from the United Kingdom. European Financial Management,...
  • J.Elster, (1998). Emotions and economic theory. Journal of Economic Literature, 36, 47–74.
  • J.R.Fredericksons, & J.S.Miller, (2004). The effects of pro forma earnings disclosures on analysts’ and nonprofessional investors’ equity...
  • D.Givoly, & J.Lakonishok, (1984). Properties of analysts’ forecasts of earnings:A review and analysis of the research. Journal of Accounting...
  • D.Hirshleifer, & S.H.Teoh, (2003). Herd behavior and cascading in capital markets:A review and synthesis. European Financial Management,...
  • P.Hribar, & J.McInnis, (2012). Investor sentiment and analysts’ earnings forecast errors. Management Science, 58, 293–307. doi:10.1287/mnsc.1110.1356
  • B.Ke, & Y.Yu, (2009). Why don’t analysts use their earnings forecasts in generating stock recommendations? Retrieved from SSRN http://ssrn.com/abstract=1011449
  • C.Kim, & C.Pantzalis, (2003). Global/industrial diversification and analyst herding. Financial Analysts Journal, 59(2), 69–79. doi:10.2469/faj.v59.n2.2515
  • M.Krishnan, S.Lim, & P.Zhou, (2005). Who herds? Who doesn’t? Retrieved from http://ssrn.com/abstract=850625
  • A.Kumar, (2009). Hard-to-value stocks, behavioral biases, and informed trading. Journal of Financial and Quantitative Analysis, 44, 1375–1401....
  • S.Lai, L.Ng, & B.Zhang, (2009). Informed trading around the world (Working Paper). Australian School of Business. (Previous title of Lai,...
  • J.Lakonishok, A.Shleifer, & R.W.Vishny, (1992). The impact of institutional trading on stock prices. Journal of Financial Economics, 32,...
  • A.Lo, (1999). The three P’s of total risk management. Financial Analysts Journal, 55, 13–26. doi:10.2469/faj.v55.n1.2238
  • G.Loewenstein, (2000). Emotions in economic theory and economic behavior. American Economic Review, 90, 426–432. doi:10.1257/aer.90.2.426
  • E.Maug, & N.Naik, (2011). Herding and delegated portfolio management:The impact of relative performance evaluation on asset allocation....
  • Y.M.Mensah, & R.Yang, (2008). An empirical evaluation of analysts’ herding behavior following Regulation Fair Disclosure. Journal of Accounting...
  • L.Muga, & R.Santamaría, (2006). Momentum:características y estabilidad temporal. Resultados para la bolsa española. Revista Española de...
  • R.A.Olsen, (1996). Implications of herding behavior for earnings estimation, risk assessment, and stock returns. Financial Analysts Journal,...
  • R.A.Olsen, (1997). Investment risk:The experts’ perspective. Financial Analysts Journal, 53, 62–66. doi:10.2469/faj.v53.n2.2073
  • E.Peters, & P.Slovic, (2000). The springs of action:Affective and analytical information processing in choice. Personality and Social...
  • R.G.Rajan, (1994). Why bank credit policies fluctuate:A theory and some evidence. TheQuarterly Journal of Economics, 109, 399–441. doi:10.2307/2118468
  • S.Ramnath, S.Rock, & P.Shane, (2008). The financial analyst forecasting literature:A taxonomy with suggestions for further research. International...
  • R.Roll, (1992). A mean/variance analysis of tracking error. TheJournal of Portfolio Management, 18, 13–22. doi:10.3905/jpm.1992.701922
  • D.S.Scharfstein, & J.C.Stein, (1990). Herd behavior and investment. American Economic Review, 80, 465–479.
  • H.Shefrin, (2000). Beyond greed and fear:Understanding behavioral finance and the psychology of investing. Cambridge, MA:HBS Press.
  • R.Thaler, (1991). Quasi-rational economics. New York, NY:Russel Sage Foundation.
  • B.Trueman, (1994). Analyst forecasts and herding behavior. Review of Financial Studies, 7, 97–124. doi:10.1093/rfs/7.1.97
  • L.Tsai-hui, J.Woan-yuh, & T.Seng-su, (2013). Do security analysts herd on stock recommendations and does it affect returns? International...
  • E.Zitzewitz, (2001). Measuring herding and exaggeration by equity analysts (Working Paper). Stanford, CA:Stanford University, Graduate School...