Chartered Financial Analysts Institute, Financial Analysts Journal, 1(56), p. 62-69
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This paper offers the first systematic evidence that stock recommendations,published on the Internet move,prices and trading volumes. Small-cap growth stock buy announcements,published in the nightly performance,recap of The Motley Fool’sRule Breaker Portfolio engender statistically significant abnormal,returns. Such effects are generally larger than those caused by second-hand buy recommendations published in the print media, but somewhat larger than the average price increase after a stock purchase is recommended,on PBS’s Wall $treet Weektelevision program. Unusual,trading volume,also provides evidence consistent with the hypothesis that The Motley Foolbuy announcements are closely followed and acted upon by Internet investors. Keywords: Market Efficiency, Secondary Dissemination of Information, Internet.