Changes to the Work Environment and Analyst Herding Behavior

We find that analysts exhibit strong herding behavior in their earnings forecasts following an employment change—possibly as a response to the unfamiliarity of their new workplace. Overall, this has no significant effect on forecast accuracy but an adverse effect on the market impact of their forecasts. This research adds to the literature by showing that analysts’ herding behavior can arise simply from having to adjust to a new work environment. Yet, it appears to be a strategic adaptation as the moving analysts only choose to herd when the consensus serves as a reliable benchmark to maintain performance standards.