Review of Quantitative Finance and Accounting

, Volume 33, Issue 3, pp 209–232

The value of columnists’ stock recommendations: an event study approach

Original Research

DOI: 10.1007/s11156-009-0114-2

Cite this article as:
Palmon, D., Sudit, E.F. & Yezegel, A. Rev Quant Finan Acc (2009) 33: 209. doi:10.1007/s11156-009-0114-2

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.

Keywords

Stock recommendations Financial columnists Analysts Event study 

JEL Classification

G11 G12 G14 G24 M41 

Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Department of Accounting, Business Ethics & Information SystemsThe State University of New JerseyNewarkUSA
  2. 2.Department of AccountancyBentley UniversityWalthamUSA

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