Price Pressure: Evidence from the 'Dartboard' Column
Posted: 7 Nov 1998
Abstract
We investigate whether analysts' recommendations in the "Dartboard" column of the Wall Street Journal have an impact on stock prices and whether this impact is temporary or long-lived. We document a significant 2-day announcement effect that is reversed within 15 days. This announcement effect is intertwined with the pros' track record. Our study supports the price pressure hypothesis: abnormal returns and trading volumes around the announcement day are mainly driven by noise trading from naive investors. On average, investors following the experts' recommendations lost 3.8% on a risk-adjusted basis over a 6-month holding period.
JEL Classification: G12, G14
Suggested Citation: Suggested Citation