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The effect of sponsored equity research on stock prices

Wijk, Jesper LU (2019) NEKP01 20191
Department of Economics
Abstract
This paper examines the effect from issuer-sponsored equity research on stock prices in Sweden. This kind of reports has risen in popularity and today, over 290 firms in Sweden are covered by a sponsored equity research. To reach a conclusion, a traditional event study was performed on 141 Swedish firms between the years of 2008 and 2019. The result show that there are significant, at the 1%-level, abnormal returns in the event period, both when looking at all 141 firms and when dividing the reports published by one of the large banks (Nordea, SEB and Danske Bank) and the reports published by one of the smaller firms (Redeye, Jarl Securities and Introduce) into two subsamples. Previous research has shown that traditional equity and credit... (More)
This paper examines the effect from issuer-sponsored equity research on stock prices in Sweden. This kind of reports has risen in popularity and today, over 290 firms in Sweden are covered by a sponsored equity research. To reach a conclusion, a traditional event study was performed on 141 Swedish firms between the years of 2008 and 2019. The result show that there are significant, at the 1%-level, abnormal returns in the event period, both when looking at all 141 firms and when dividing the reports published by one of the large banks (Nordea, SEB and Danske Bank) and the reports published by one of the smaller firms (Redeye, Jarl Securities and Introduce) into two subsamples. Previous research has shown that traditional equity and credit research can act as a coordination mechanism for stock prices and the result from this paper indicate a similar result; the stock price increases due to good news and the volatility decrease as the sponsored equity research is published. Perhaps, due to the rendering and interpretation of already public information, together with new target prices and estimates for the future. (Less)
Please use this url to cite or link to this publication:
author
Wijk, Jesper LU
supervisor
organization
alternative title
An event study on Swedish companies
course
NEKP01 20191
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Sponsored equity research, commissioned research, event study, abnormal returns
language
English
id
8980948
date added to LUP
2019-08-08 10:23:38
date last changed
2019-08-08 10:23:38
@misc{8980948,
  abstract     = {{This paper examines the effect from issuer-sponsored equity research on stock prices in Sweden. This kind of reports has risen in popularity and today, over 290 firms in Sweden are covered by a sponsored equity research. To reach a conclusion, a traditional event study was performed on 141 Swedish firms between the years of 2008 and 2019. The result show that there are significant, at the 1%-level, abnormal returns in the event period, both when looking at all 141 firms and when dividing the reports published by one of the large banks (Nordea, SEB and Danske Bank) and the reports published by one of the smaller firms (Redeye, Jarl Securities and Introduce) into two subsamples. Previous research has shown that traditional equity and credit research can act as a coordination mechanism for stock prices and the result from this paper indicate a similar result; the stock price increases due to good news and the volatility decrease as the sponsored equity research is published. Perhaps, due to the rendering and interpretation of already public information, together with new target prices and estimates for the future.}},
  author       = {{Wijk, Jesper}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The effect of sponsored equity research on stock prices}},
  year         = {{2019}},
}