THE DARTBOARD COLUMN - 2ND-HAND INFORMATION AND PRICE PRESSURE

This study analyzes the effect of second-hand information on the behav ior of security prices and volume using analysts' recommendations publ ished in the monthly ''Dartboard'' column of the Wall Street Journal. For the two days following the publication of the recommendations, ave rage positive abnormal returns of 4 percent-nearly twice the level of abnormal returns documented in previous research on analyst recommenda tions-and average volume double normal volume levels on the two days f ollowing publication of the recommendations are documented. The positi ve abnormal return on announcement is partially reversed within 25 tra ding days. The authors conclude that the positive abnormal return on a nnouncement of the recommendations is a result of naive buying pressur e as well as the information content of the analysts' recommendations.