The value of columnists' stock recommendations: An event study approach

Dan Palmon, Ephraim F. Sudit, Ari Yezegel

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

This study examines the value of stock recommendations made by columnists in three leading business magazines; Business Week, Forbes, and Fortune during the period 2000-2003. Empirical results suggest that the anomalous returns documented in prior studies on columnists are sample specific and are not representative of columnist recommendations in general. We also investigate whether columnists' timing, content and style affect the market reaction to recommendations. We find that recommendations that contain references to management or provide merger & acquisition related rumor trigger significantly greater market reactions. Finally, our long-term performance analysis of columnist recommendations suggests that investors following columnists' advice during the 2000- 2003 period would not have consistently earned abnormal returns controlling for market risk, book-to-market, size, and momentum effects.

Original languageEnglish (US)
Pages (from-to)209-232
Number of pages24
JournalReview of Quantitative Finance and Accounting
Volume33
Issue number3
DOIs
StatePublished - 2009

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)
  • Finance

Keywords

  • Analysts
  • Event study
  • Financial columnists
  • Stock recommendations

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