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
Posted: 24 May 2013 Last revised: 30 May 2013
Date Written: August 23, 1998
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.
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