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Analyst target price revisions and institutional herding

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  • Gu, Chen
  • Guo, Xu
  • Zhang, Chengping

Abstract

We document that institutional herding behavior is associated with analyst target price revisions even after controlling for the effects of analyst recommendations and earnings forecasts, and provide insights into the price impact of institutional herding. Institutional investors tend to buy the same stocks following an upward target price revision and sell the same stocks following a downward price revision. Moreover, institutional investors tend to overreact to analysts' target price revisions, which exacerbates the mispricing in the stock market. Such price destabilizing effect is particularly pronounced for herding among investment firms.

Suggested Citation

  • Gu, Chen & Guo, Xu & Zhang, Chengping, 2022. "Analyst target price revisions and institutional herding," International Review of Financial Analysis, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:finana:v:82:y:2022:i:c:s1057521922001508
    DOI: 10.1016/j.irfa.2022.102189
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    7. Chen, Yuan & Han, Dongmei & Zhou, Xiaofeng, 2023. "Mining the emotional information in the audio of earnings conference calls : A deep learning approach for sentiment analysis of securities analysts' follow-up behavior," International Review of Financial Analysis, Elsevier, vol. 88(C).

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    More about this item

    Keywords

    Institutional investor; Herding; Analyst target price revision; Price impact;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G40 - Financial Economics - - Behavioral Finance - - - General

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