In which Media are Analysts’ Recommendations most Followed?

Is it worth to follow press or TV financial advice? Is it a good bargain for an investor to spend money to gain access to these recommendations? In other words, can an investor make a profit following analysts’ recommendations published in press or broadcast? We address the question by examining whether the release day or a few days after, media coverage of analysts’ recommendations have an impact on share prices. If so, does the channel through which the information is released matter? Our study is the first, to our knowledge, comparing for the same time period, in the same country and in the same developed financial market the impact of recommendations on stock prices according to the type of media in which they appeared. We show that recommendations provided by specialized media and especially recommendations broadcast on TV have the strongest effect on share prices the day of the release. But if we take account a longer period after the release, acting on an upgrade published in the financial press or in the general press seems to be the strategies that, on average, procure the highest gains.
Classification codes: G14; G15 ; O16

Keywords: Media Coverage; Analysts ‘Recommendations; Stock Prices; Event Studies; Market Efficiency.