Financial Magazines impact on the Swedish Stock Market : An event study

The purpose of this study is to investigate the effect of a stock recommendation from the leading financial magazines in Sweden. The study aims to measure the impact a recommendation illustrates in true value. The measurements are mean abnormal returns (AR), mean cumulative abnormal returns (CAR) and mean abnormal volume (AV). Conducting an event study to monitor, not only the date of announcement, but to also validate or invalidate the recommendation as a fundamental changer in the stock case. Where the calculations are made before, on and after the event occurs. With the aim to test if the market is efficient and in line with the rational theories, or if there are other explanatory theories, like the behavioral financial approach, that can explain the results. The sample consists of 571 recommendations that have been announced 2017 and 2018, divided into categories of buy and sell. The sample of buy and sell are also tested in subcategories of small and large companies, to measure the impact due to size of the firm, as a dependent variable. The empirical results shows that there are AR and AV existing due to recommendations. Small companies have the highest measured AR, with sell recommendations having the largest effects. The sell recommendations changes the value and the fundamentals of the stocks, while buy recommendations react positive to the recommendations on the day of announcement, then reverses back to the same price in the end of the event window. Suggesting that the market act both efficient and rational, but also irrational and ineffective, depending on what type of recommendation that is being released and how large and well monitored the company, that gets the recommendation is