Analysts rely more on earnings announcements post-regulation, leading to herding.
The study looked at how a regulation affected how analysts use earnings announcements to make predictions about companies. After the regulation, analysts relied more on earnings announcements for their forecasts. This led to more analysts making predictions right after earnings announcements, and their forecasts were more similar to each other. Overall, there were more errors in the forecasts, showing that earnings announcements became a more important source of information for analysts.
