Herding among investment newsletters: Theory and evidence

Published

Journal Article

A model is developed which implies that if an analyst has high reputation or low ability, or if there is strong public information that is inconsistent with the analyst's private information, she is likely to herd. Herding is also common when informative private signals are positively correlated across analysts. The model is tested using data from analysts who publish investment newsletters. Consistent with the model's implications, the empirical results indicate that a newsletter analyst is likely to herd on Value Line's recommendation if her reputation is high, if her ability is low, or if signal correlation is high.

Full Text

Duke Authors

Cited Authors

  • Graham, JR

Published Date

  • January 1, 1999

Published In

Volume / Issue

  • 54 / 1

Start / End Page

  • 237 - 268

International Standard Serial Number (ISSN)

  • 0022-1082

Digital Object Identifier (DOI)

  • 10.1111/0022-1082.00103

Citation Source

  • Scopus