An Empirical Evaluation of Analysts' Herding Behavior Following Regulation Fair Disclosure

This study examines whether analysts' forecast revisions exhibited increased herding behavior following the adoption of Regulation Fair Disclosure. A recent model by Arya, Mittendorf, and Narayanamoorthy (2005) projects that one potential consequence of Regulation Fair Disclosure might be increased herding by financial analysts, although previous studies examining the economic consequences of Regulation FD have not found any averse consequence for investors. We examine financial analysts forecasting behavior before and after the adoption of Regulation FD in order to test the Arya et al. model. Our general finding is that increased herding behavior cannot be detected among either the firms most directly impacted by Regulation FD (those which used to hold closed press conferences), or those least affected (firms that used to hold open press conferences or did not hold them)