{"title":"Herding the crowds: how sentiment affects crowdsourced earnings estimates","authors":"John Garcia","doi":"10.1007/s11408-024-00447-4","DOIUrl":null,"url":null,"abstract":"<p>This study investigates the impact of firm-level investor sentiment derived from Twitter and news media on herding behavior among contributors on Estimize, a leading platform for crowdsourced earnings forecasts. The findings show that sentiment gleaned from tweets and news media content positively influences herding among Estimize contributors. Notably, herding intensifies when Twitter and news sentiment polarities align, while divergent sentiment polarities diminish this herding effect. Additionally, the analysis indicates that firms with investment-grade ratings and those characterized by low valuation uncertainty are particularly prone to sentiment-driven herding. Importantly, positive sentiment is identified as having a more potent influence on herding behavior than negative sentiment. By focusing on Estimize contributors, this study offers insights into how firm-level sentiment cues shape the crowd’s herding behavior, offering new perspectives on how different media sources shape the wisdom of the crowd.</p>","PeriodicalId":44895,"journal":{"name":"Financial Markets and Portfolio Management","volume":"24 1","pages":""},"PeriodicalIF":1.5000,"publicationDate":"2024-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Financial Markets and Portfolio Management","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s11408-024-00447-4","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study investigates the impact of firm-level investor sentiment derived from Twitter and news media on herding behavior among contributors on Estimize, a leading platform for crowdsourced earnings forecasts. The findings show that sentiment gleaned from tweets and news media content positively influences herding among Estimize contributors. Notably, herding intensifies when Twitter and news sentiment polarities align, while divergent sentiment polarities diminish this herding effect. Additionally, the analysis indicates that firms with investment-grade ratings and those characterized by low valuation uncertainty are particularly prone to sentiment-driven herding. Importantly, positive sentiment is identified as having a more potent influence on herding behavior than negative sentiment. By focusing on Estimize contributors, this study offers insights into how firm-level sentiment cues shape the crowd’s herding behavior, offering new perspectives on how different media sources shape the wisdom of the crowd.
期刊介绍：
The journal Financial Markets and Portfolio Management invites submissions of original research articles in all areas of finance, especially in – but not limited to – financial markets, portfolio choice and wealth management, asset pricing, risk management, and regulation. Its principal objective is to publish high-quality articles of innovative research and practical application. The readers of Financial Markets and Portfolio Management are academics and professionals in finance and economics, especially in the areas of asset management. FMPM publishes academic and applied research articles, shorter ''Perspectives'' and survey articles on current topics of interest to the financial community, as well as book reviews. All article submissions are subject to a double-blind peer review. http://www.fmpm.org
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