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Executive Summary
This marketing–finance interface article relies on advertising and persuasive communications theories to uncover persistent variations in naive investor response to television stock recommendations. It uses an event study methodology to determine the size of the next-day abnormal market reaction to recommendations on the CNBC show Mad Money with Jim Cramer. Although viewers are actively looking for recommendations, the authors find that any individual recommendation is still subject to many of the same communication challenges as traditional advertisements. They show that traditional advertising variables, such as message length, recency and primacy effects, information clutter, and source credibility, influence the size of the market reaction to a “buy” recommendation. The article also explores the possibility of preshow information leakage, general patterns of market response to buy recommendations, and the broader public policy implications of providing television stock recommendations to a large group of naive investors.  Implications of the findings are important for financial industry professionals, marketers, managers of public companies, and those interested in public policy aspects related to televised stock recommendations.

Biography
Ekaterina V. Karniouchina is Assistant Professor of Marketing in the Argyros School of Business and Economics at Chapman University. She received her PhD in Marketing from the University of Utah. Her research concentrates on interdisciplinary issues; in particular, she aims to improve managerial decision making by synthesizing insights from marketing, finance, and strategy domains. Her research has been published in various journals, including Journal of Product Innovation Management, Marketing Letters, and European Journal of Operational Research.

William L. Moore is David Eccles Professor of Marketing at the University of Utah’s David Eccles School of Business. He has also taught at Columbia University, University of Alberta, and ESC Tours. He has a BS in Mathematics and an MBA from Oklahoma State University and a PhD from the Krannert School of Purdue University. His research interests include choice modeling and new product development. He has published in and serves on the editorial boards of Journal of Marketing Research and Marketing Letters. In addition to these journals, he has published in various journals, including Journal of Marketing, Marketing Science, Manufacturing and Service Operations Management, Journal of Product Innovation Management, International Journal of Research in Marketing, and Journal of Consumer Research.

Kevin J. Cooney is a doctoral student in the Kelley School of Business at Indiana University. Kevin’s research concentrates on analyzing the relationship between marketing metrics and financial markets.

Journal of Marketing, Volume 73, Number 6, November 2009
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