Working Papers in Economics,
University of Gothenburg, Department of Economics

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.

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

JEL-codes: G10; G14; G20

24 pages, First version: May 11, 2003. Revised: November 17, 2004. Earlier revisions: September 19, 2003.

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