Analysts’ recommendation and herding behaviour

Abstract

Financial analysts’ recommendations have a great impact on both, a company’s market valuation and investor decision-making. Owing to miniscule knowledge of markets that majority of Indian public has, they look for recommendations from analysts. Therefore, listed companies attempt to influence analysts’ recommendations through quarterly reports, news updates and other financial and non- financial disclosure activities. Thus, analysts provide recommendations based on the data provided by companies and other factors. This research paper analyses’ the recommendations given by equity analysts and identify if there is a herding behaviour observed among analysts following the lead analyst.