The value of columnists’ stock recommendations: an event study approach |
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Authors: | Dan Palmon Ephraim F Sudit Ari Yezegel |
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Institution: | (1) Department of Accounting, Business Ethics & Information Systems, The State University of New Jersey, 180 University Avenue, Newark, NJ 07102, USA;(2) Department of Accountancy, Bentley University, 175 Forest Street, Waltham, MA 02452, USA |
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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. |
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