A breed apart? Security analysts and herding behavior

Journal of Business Ethics 18 (3):305 - 314 (1999)
  Copy   BIBTEX

Abstract

Herding behavior occurs when security analysts ignore their private opinions and issue public forecasts that mimic the earnings forecasts of others. Joining the consensus provides cover for analysts' reputations. We question the ethics of this practice when the motive to protect one's reputation takes precedence over the forecase accuracy motive. While seemingly predictable behavior from a self interested perspective, herding behavior has subtle but long term ramifications for the efficient pricing of securities and the preservation of the public trust in the financial services profession. We call upon each individual analyst as well as the profession to exercise the moral courage necessary to cultivate a climate of personal and public integrity. Personal resistance and pro-active policies are prescribed as actions to assist analysts to become more cognizant of their motivations, as well as to promote a more ethical professional context.

Links

PhilArchive



    Upload a copy of this work     Papers currently archived: 91,122

External links

Setup an account with your affiliations in order to access resources via your University's proxy server

Through your library

Analytics

Added to PP
2009-01-28

Downloads
18 (#747,034)

6 months
4 (#477,225)

Historical graph of downloads
How can I increase my downloads?