Drivers and Implications of Firm Herding Behavior: A Literature Review and Research Agenda for Financial Reporting Scholars

Purpose: This paper presents a narrative review of the research on the drivers and effects of firm herding behavior on corporate decision-making. It aims to synthesize the knowledge and develop a research agenda for financial reporting scholars. Design/methodology/approach: We identified 65 journal articles in the Web of Science and Scopus databases and coded the findings to classify the drivers and implications of firm herding behavior. We adapted the PRISMA protocol to our interdisciplinary approach. Findings: Herding is primarily driven by peer influence, uncertainty reduction, and career concerns, and often has negative outcomes such as market inefficiencies and suboptimal decisions. However, herding also has some benefits in the areas of innovation and research and development. Implementing these insights within the financial reporting domain, we identify areas for further study, such as the role of regulatory pressures and the effect of new technologies. Originality/value: This review examines the potential influence of firm herding behaviors on financial reporting, offering a new perspective on conformity in corporate communications. Keywords: systematic literature review, PRISMA protocol, herding, informational cascades, financial reporting.