Mad Money: Does the combination of stock recommendation and show segment matter?

Few observable patterns of stimuli appear to consistently affect retail investor behavior. This study is motivated by what is presumably the most prominent media source of advice for retail investors in the United States, Jim Cramer’s Mad Money broadcast. We analyze return metrics of stocks recommended by Jim Cramer. We differentiate among five different recommendations and across five different segments of the show to determine if pricing behavior differs in magnitude and persistence, depending on the nature of the recommendation and the segment of the show in which the recommendation appears. Results indicate that the pricing impact is greatest for stocks discussed on longer-duration segments of the show and that there is an asymmetric effect in terms of “buy” versus “sell” recommendations. The results also highlight the tendency of the impact to be larger for smaller market capitalization firms.