Analysts' Herding Behavior and Forecast Release Timing

This study investigates whether weak analysts announce their earnings forecasts after strong analysts’ forecast disclosures, consistent with the herding theory. The empirical results indicate that (1) weak analysts are likely to announce their earnings forecasts before strong analysts’ forecast disclosures (2) the market’s responses to leading weak analysts’ forecasts are greater than following weak analysts’ forecasts; (3) leading weak analysts’ forecasts are accurate as much as strong analysts’ forecasts; (4) following weak analysts’ forecasts are more accurate than strong analysts’ forecasts. Overall, these results imply that weak analysts choose pre－ (post－) announcements before (after) strong analysts’ forecast disclosures when their earnings forecasts are (not) accurate as much as strong analysts’ forecasts.