The Study On The Security Analysts' Herds

With the development of Chinese security market,sell-side security analysts have grown into a large group of people.Because of the easy access to reports issued by analysts in China,both institutional investors and individual investors can try to extract relevant information from security analysts' forecasts.However,the tendency to herd of analysts may reduce the value of information contained in the forecasts.Using the analyst report data of China's securities market for 10-20 years in 2009-2018,the focus of this study is to look into the association between analysts' characteristics and their tendency to herd in their earnings forecasts and the corresponding market reaction to analysts' herding in earnings forecasts in Chinese market.This study classifies analysts'earnings forecasts as herding or bold and finds that(1)herding likelihood decreases with analysts' initial reputation and historical forecast accuracy(2)earnings forecasts by analysts with higher historical forecast accuracy has higher likelihood to induce other analysts to follow him(3)the market detects herding earnings forecasts and react less to those forecasts.