Do German Security Analysts Herd?

In this paper, the authors employ an innovative new methodology suggested by Bernhardt et al. (2006) to examine the herding (or anti-herding) behavior of German analysts in case of earnings forecasts. Their methodology avoids well-known shortcomings often encountered in related studies, such as, e.g., correlated information signals, unexpected common shocks to earnings, systematic optimism or pessimism or forecast target mismeasurement. Their findings suggest that German analysts anti-herd, i.e., they systematically issue earnings forecasts which are further away from the consensus forecast than their private information indicates.