Market Reactions to the 'Hot Stock' Column of the Financial Post

Canadian Journal of Administrative Sciences, Vol. 16, No. (2), pp. 118-131, DOI: 10.1111/j.1936-4490.1999.tb00618.x

University of Alberta School of Business Research Paper No. 2013-226

Posted: 24 May 2013 Last revised: 30 May 2013

See all articles by Vikas Mehrotra

Vikas Mehrotra

University of Alberta - Department of Finance and Statistical Analysis

Wayne Yu

City University of Hong Kong

Chu Zhang

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Date Written: August 23, 1998

Abstract

We examine the market reaction to recommendations in the Financial Post’s “Hot Stock” column. For buy recommendations, we find a significant average excess return of 1.23% on the publication day; the average excess return is greater (1.84%) for small firms. We also document a significant increase in trading volume and in stock price volatility on and immediately prior to the publication day. Finally, we detect a pattern of return reversal within 14 trading days after the publication. Volume arid volatility subside to normal levels within the period of time in which reversals occur. We interpret our results as evidence of trading on second-hand public information.

Suggested Citation

Mehrotra, Vikas and Yu, Wayne and Zhang, Chu, Market Reactions to the 'Hot Stock' Column of the Financial Post (August 23, 1998). Canadian Journal of Administrative Sciences, Vol. 16, No. (2), pp. 118-131, DOI: 10.1111/j.1936-4490.1999.tb00618.x ; University of Alberta School of Business Research Paper No. 2013-226. Available at SSRN: https://ssrn.com/abstract=2269327

Vikas Mehrotra (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

School of Business
University of Alberta
Edmonton, Alberta T6G 2R6
Canada
780-492-2976 (Phone)
780-492-3325 (Fax)

Wayne Yu

City University of Hong Kong ( email )

Kowloon
Hong Kong

Chu Zhang

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

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