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Stock Recommendations in Swedish Printed Media: Leading or Misleading?

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  • Erik Liden

Abstract

This paper analyses the initiated and changed recommendations published in six well-known Swedish newspapers and business magazines for the period 1996-2000 using a buy-and-hold abnormal returns (BHARs) approach. The results distinguish between recommendations from analysts and journalists. Buy recommendations were misleading investors, whereas sell recommendations were leading them correctly, overall yielding returns in line with the market. This asymmetry is due to positive information from the management of the company being more intricate to interpret than negative. Both good and bad information provided by the management is generally positively biased, a phenomenon influencing both analyst and journalist recommendations. Following buy and sell recommendations from analysts yielded BHARs in line with those from journalists, which in turn generates returns in line with their peers. Going short in the recommended stocks, irrespective of type and origin, would lead to a 24-month BHAR of 14%.

Suggested Citation

  • Erik Liden, 2006. "Stock Recommendations in Swedish Printed Media: Leading or Misleading?," The European Journal of Finance, Taylor & Francis Journals, vol. 12(8), pages 731-748.
    • Handle: RePEc:taf:eurjfi:v:12:y:2006:i:8:p:731-748
    DOI: 10.1080/13518470500531093
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    Cited by:

    1. Lidén, Erik R. & Rosenberg, Markus, 2006. "Ten Years of Misleading Information - Investment Advice in Printed Media," Working Papers in Economics 230, University of Gothenburg, Department of Economics.

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