Analyst Herding, Shareholder Investment Horizon, and Management Earnings Guidance

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dc.contributor.authorWhite, Todd Palmeren
dc.contributor.committeechairMaher, John J.en
dc.contributor.committeememberBrown, Robert M.en
dc.contributor.committeememberBarkhi, Rezaen
dc.contributor.committeememberOler, Mitchell J.en
dc.contributor.committeememberInce, Ozgur S.en
dc.contributor.departmentAccounting and Information Systemsen
dc.date.accessioned2014-03-14T21:10:29Zen
dc.date.adate2012-04-24en
dc.date.available2014-03-14T21:10:29Zen
dc.date.issued2012-04-04en
dc.date.rdate2012-04-24en
dc.date.sdate2012-04-13en
dc.description.abstractThis dissertation examines the characterization of transient investors by financial analysts. Transient investors have been portrayed in the literature as either 1) informed investors or 2) poor monitors. No research to date, however, has examined how financial analysts, who are important information intermediaries, characterize transient investors. A view of transient investors through the lens of a financial analyst is obtained through examining how the presence of transient owners in a firm affects financial analysts' decision making. Specifically, this study examines how transient ownership affects both the propensity of analysts to herd when issuing earnings forecasts for a given firm as well as the incidence with which analysts revise their forecasts when the firm issues earnings guidance. Empirical tests show that financial analysts exhibit a greater propensity to herd when there are transient investors present. The proposed reason for this effect is analysts are herding due to reputational concerns. Further testing, however, does not show that the relation between transient ownership and analyst herding is owed to poor monitoring behavior of transient-owned firms. In contrast, evidence is consistent with the hypothesis that the firm information environment of transient-owned firms is an important cause of analyst herding. In summary, evidence is consistent with the informed investor portrayal of transient investors and there is no evidence indicating financial analysts view transient owners as poor monitors. Finally, when the decision of analysts to issue revised forecasts is examined, it is found that having a higher percentage of the firm owned by dedicated or long-term investors increased the propensity of analysts to issue a revised forecast. Thus, while my analysis is inconsistent with a poor monitoring portrayal of transient investors, results suggest that a dedicated investor base can enhance the perceived credibility of firm disclosures.en
dc.description.degreePh. D.en
dc.identifier.otheretd-04132012-121410en
dc.identifier.sourceurlhttp://scholar.lib.vt.edu/theses/available/etd-04132012-121410/en
dc.identifier.urihttp://hdl.handle.net/10919/37618en
dc.publisherVirginia Techen
dc.relation.haspartWhite_TP_D_2012.pdfen
dc.rightsIn Copyrighten
dc.rights.urihttp://rightsstatements.org/vocab/InC/1.0/en
dc.subjectEarnings Guidanceen
dc.subjectShort-Term Horizonen
dc.subjectTransient Investorsen
dc.subjectHerdingen
dc.subjectFinancial Analystsen
dc.titleAnalyst Herding, Shareholder Investment Horizon, and Management Earnings Guidanceen
dc.typeDissertationen
thesis.degree.disciplineAccounting and Information Systemsen
thesis.degree.grantorVirginia Polytechnic Institute and State Universityen
thesis.degree.leveldoctoralen
thesis.degree.namePh. D.en

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