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The “Dartboard” Column: Second-Hand Information and Price Pressure

Published online by Cambridge University Press:  06 April 2009

Brad M. Barber  and
Douglas Loeffler
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Abstract

This study analyzes the effect of second-hand information on the behavior of security prices and volume using analysts' recommendations published in the monthly “Dartboard” column of the Wall Street Journal. For the two days following the publication of the recommendations, average positive abnormal returns of 4 percent—nearly twice the level of abnormal returns documented in previous research on analyst recommendations—and average volume double normal volume levels on the two days following publication of the recommendations are documented. The positive abnormal return on announcement is partially reversed within 25 trading days. The authors conclude that the positive abnormal return on announcement of the recommendations is a result of naive buying pressure as well as the information content of the analysts' recommendations.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 28 , Issue 2 , June 1993 , pp. 273 - 284
Copyright
Copyright © School of Business Administration, University of Washington 1993

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