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Title:When are investors' uncertainty judgments influenced by their perceptions about analyst herding?
Author(s):Keshk, Walied
Director of Research:Elliott, W. Brooke
Doctoral Committee Chair(s):Elliott, W. Brooke
Doctoral Committee Member(s):Jackson, Kevin E.; Krische, Susan D.; Weisbenner, Scott
Department / Program:Accountancy
Discipline:Accountancy
Degree Granting Institution:University of Illinois at Urbana-Champaign
Degree:Ph.D.
Genre:Dissertation
Subject(s):Analyst Herding
Analyst Forecast Dispersion, Uncertainty Judgments
Directional Preferences
Temporal Order
Earnings Volatility
Abstract:While prior research documents that analyst sometimes herd their forecasts, very few studies investigate how investors’ judgments are influenced by their perceptions about the likelihood of analyst herding. In this dissertation, I conduct two experimental studies to investigate conditions under which investors’ assessments of uncertainty about future earnings are influenced by their perceptions about the likelihood of analyst herding. My first study extends research on the determinants of forecasters’ uncertainty judgments by examining the joint influence of analyst forecast dispersion and earnings volatility on investors’ uncertainty judgments, to provide insights into whether investors consider the likelihood of analyst herding in a situation that allows for, but does not prompt investors to think of, herding. Results suggest that investors do not consider the likelihood of analyst herding based on the relation between analyst forecast dispersion and earnings volatility. My second study provides a potential explanation for the mixed findings documented in prior research about investors’ reactions to the likelihood of analyst herding by examining the joint influence of the temporal order and preference-consistency of analyst forecasts on investors’ uncertainty judgments. Results suggest that investors consider the likelihood of analyst herding, and perceptions about herding influence investors’ uncertainty judgments, when analyst forecasts are preference-inconsistent, but not when analyst forecasts are preference-consistent. In addition, my second study extends research on investors’ credulity by suggesting that motivated reasoning and skepticism can be an additional mechanism that contributes to that credulity. Further, the findings of my two studies provide implications and opportunities for future research on investors’ reactions to the characteristics of analyst forecasts, investors’ reactions to the likelihood of analyst herding, and the determinants of investors’ uncertainty judgments.
Issue Date:2012-12
URI:http://hdl.handle.net/2142/42123
Rights Information:Copyright 2012 Walied Keshk
Date Available in IDEALS:2013-02-03
2015-02-03
Date Deposited:2012-12


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