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Cited by 371

The DOI matches its Crossref record; 88 of the 88 references it cites were found in a registry or an index.

Analyst Recommendations, Mutual Fund Herding, and Overreaction in Stock Prices

Open access
Brown, Nerissa C., Wei, Kelsey D., Wermers, Russ·2014·Management Science
DOI 10.1287/mnsc.2013.1751
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Abstract

This paper documents that mutual funds “herd” (trade together) into stocks with consensus sell-side analyst upgrades, and herd out of stocks with consensus downgrades. This influence of analyst recommendation changes on fund herding is stronger for downgrades, and among managers with greater career concerns. These findings indicate that career-concerned managers are incentivized to follow analyst information, and that managers have a greater tendency to herd on negative stock information, given the greater reputational and litigation risk of holding losing stocks. Furthermore, starting in the mid-1990s (when aggregate mutual fund equity ownership is significantly higher), stocks traded by career-concerned herds of fund managers in response to analyst recommendation changes experience a significant same-quarter price impact, followed by a sharp subsequent price reversal. Our evidence suggests that analyst recommendation revisions induce herding by career-concerned fund managers, and that this type of trading has become price destabilizing with the increasing level of mutual fund ownership of stocks. This paper was accepted by Wei Jiang, finance.

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Metadata

Authors
Brown, N. C., Wei, K. D., & Wermers, R.
Venue
Management Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Published
2014-01
Volume
60
Issue
1
Pages
1-20
ISSN
  • 0025-1909 (ISSN-L)
  • 1526-5501
DOI
10.1287/mnsc.2013.1751
OpenAlex
W3121551929
Cited by
371
References
88
FWCI
41.30
Type
journal article
Language
en
Open access
green

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CoChat. (2026). Citation check: Analyst Recommendations, Mutual Fund Herding, and Overreaction in Stock Prices. https://app.cochat.ai/papers/10.1287/mnsc.2013.1751
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Brown, N. C., Wei, K. D., & Wermers, R. (2014). Analyst Recommendations, Mutual Fund Herding, and Overreaction in Stock Prices. Management Science. https://doi.org/10.1287/mnsc.2013.1751

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