Aktierekommendationers påverkan på aktiemarknaden
The impact of stock recommendations on the stock market
This study examines the impact of stock recommendations on the Swedish stock market. A recommendation can be either a buy recommendation or a sell recommendation. A recommendation is established by an analyst producing a target price, which is a forecast of the future stock price. If the target price is higher than today's share price, the analyst makes a buy recommendation; if it is lower, the analyst makes a sell recommendation. This study also examines stock analysts' valuation methods and how they determine a recommendation for a stock. Behavioural economics, on how people act during investments and the efficient market hypothesis are studied. By using data from January 2017 to December 2021 of the Stockholm Stock Exchange OMXS30 index, which contains the most traded stocks, the impact of a recommendation can be tested. An event study is used, it compares what the price of the stock would have been if the event had never taken place and compares it with the actual price after the event (Brown and Warner, 1980). This is done by using Campbell, Lo and MacKinlay (1997) principles and by doing this we can reflect a specific event and then evaluate how the recommendations have affected returns. The empirical result found in the study is that there is a positive as well as a negative relationship between stock performance and the publication of a buy or sell recommendation on the Swedish stock market.