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Stock Recommendations in Swedish Printed Media: Leading or Misleading?

Author

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  • Lidén, Erik R.

    () (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

This paper analyzes 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, 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. The information provided by management is generally positively biased, both for good and bad information. This phenomenon holds for recommendations from both analysts and journalists. Following buy- and sell recommendations from analysts yielded BHARs in line with the BHARs from following journalist recommendations, which in turn give rise to returns in line with the market.

Suggested Citation

  • Lidén, Erik R., 2003. "Stock Recommendations in Swedish Printed Media: Leading or Misleading?," Working Papers in Economics 99, University of Gothenburg, Department of Economics, revised 17 Nov 2004.
  • Handle: RePEc:hhs:gunwpe:0099
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    File URL: http://hdl.handle.net/2077/2750
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    References listed on IDEAS

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    1. Mitchell, Mark L & Stafford, Erik, 2000. "Managerial Decisions and Long-Term Stock Price Performance," The Journal of Business, University of Chicago Press, vol. 73(3), pages 287-329, July.
    2. Bjerring, James H & Lakonishok, Josef & Vermaelen, Theo, 1983. " Stock Prices and Financial Analysts' Recommendations," Journal of Finance, American Finance Association, vol. 38(1), pages 187-204, March.
    3. Jaffe, Jeffrey F, 1974. "Special Information and Insider Trading," The Journal of Business, University of Chicago Press, vol. 47(3), pages 410-428, July.
    4. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    5. John D. Lyon & Brad M. Barber & Chih-Ling Tsai, 1999. "Improved Methods for Tests of Long-Run Abnormal Stock Returns," Journal of Finance, American Finance Association, vol. 54(1), pages 165-201, February.
    6. Kothari, S. P. & Warner, Jerold B., 1997. "Measuring long-horizon security price performance," Journal of Financial Economics, Elsevier, vol. 43(3), pages 301-339, March.
    7. Mandelker, Gershon, 1974. "Risk and return: The case of merging firms," Journal of Financial Economics, Elsevier, vol. 1(4), pages 303-335, December.
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    More about this item

    Keywords

    Stock recommendations; EMH; Printed media; Initiatiation; Information asymmetry;

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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