Dissemination of Stock Recommendations and Small Investors: Who Benefits?

14 Pages Posted: 8 Jul 2015

See all articles by Bilgehan Yazici

Bilgehan Yazici

ABN AMRO - ABN-AMRO Asset Management, Turkey

Yaz Gulnur Muradoglu

Queen Mary University of London; City University London - Sir John Cass Business School

Date Written: July 7, 2015

Abstract

The objective of this study is to examine whether published investment advice generates higher returns for investors. We investigate the impact of security recommendations in the financial press on common stock prices in Istanbul Stock Exchange. Recommendations of Investor Ali column of the weekly-published popular economics journal Moneymatik constitutes our sample. The column is designed to inform individual investors about company prospects and use them as the basis for its recommendations. The results show that the published investment advice in this column does not help small investors earn excess returns. On the contrary, it provides a valuable deal to its ‘preferred investors’, if any, in selecting the stocks. If one could front-run the column’s recommendations by five days he/she could earn more than 5% per week in excess of the index return. Compounded annually the excess return of a preferred investor could earn would be more than an amazing 1500% per annum.

Keywords: excess returns; insider trading; investment advice; ISE; stocks

JEL Classification: G11, G12, G14, G15

Suggested Citation

Yazici, Bilgehan and Muradoglu, Yaz Gulnur, Dissemination of Stock Recommendations and Small Investors: Who Benefits? (July 7, 2015). Multinational Finance Journal, Vol. 6, No. 1, p. 29-42, 2002. Available at SSRN: https://ssrn.com/abstract=2627614

Bilgehan Yazici (Contact Author)

ABN AMRO - ABN-AMRO Asset Management, Turkey ( email )

Istanbul
Turkey

Yaz Gulnur Muradoglu

Queen Mary University of London ( email )

Francis Bancroft Building
Mile End Road
London, E1 4NS
United Kingdom

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom
+44 20 7040 0124 (Phone)
+44 20 7040 8853 (Fax)

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