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The information content of Morningstar StockInvestor: the Tortoise vs the Hare

  • Eurico J. Ferreira
  • Stanley D. Smith
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    Purpose – The purpose of this paper is to add to the literature on the impact of the Morningstar ratings by examining the impact of individual stock ratings in the Hare and Tortoise portfolios. Design/methodology/approach – This study uses an event study approach, where the effect of the information release on stock prices was examined. Findings – The release of the Hare and the Tortoise portfolios does have a significant impact on the stock prices on the day before the release of the reports. The significant impact of the Hare portfolio appears to be related to risk and growth factors and the new listing of a stock in the portfolio. The significant impact of the Tortoise portfolio appears to be related to growth and a downgrading of the estimated value. Originality/value – There have been numerous studies on the impact of the Morningstar ratings on mutual funds. This paper adds to that literature by examining the impact of individual stock ratings in the Hare and Tortoise portfolios.

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    Article provided by Emerald Group Publishing in its journal Managerial Finance.

    Volume (Year): 38 (2012)
    Issue (Month): 3 (March)
    Pages: 403-413

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    Handle: RePEc:eme:mfipps:v:36:y:2010:i:3:p:403-413
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    1. Guercio, Diane Del & Tkac, Paula A., 2008. "Star Power: The Effect of Monrningstar Ratings on Mutual Fund Flow," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 43(04), pages 907-936, December.
    2. Blake, Christopher R. & Morey, Matthew R., 2000. "Morningstar Ratings and Mutual Fund Performance," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 35(03), pages 451-483, September.
    3. Roberto Casarin & Marco Lazzarin & Loriana Pelizzon & Domenico Sartore, 2005. "Relative benchmark rating and persistence analysis: Evidence from Italian equity funds," The European Journal of Finance, Taylor & Francis Journals, vol. 11(4), pages 297-308.
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