Short Selling Behavior And Mad Money

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Jeffrey Hobbs PhD, Professor (Creator)
Appalachian State University (ASU )
Web Site:

Abstract: We examine 1,234 buy recommendations from Jim Cramer’s Mad Money television show. Consistent with prior research, we report positive abnormal returns immediately after buy recommendations, followed by a reversal, indicative of an overpricing event. We also find a marked increase in short selling. Our results show a positive association between shorting and the buy recommendations even after controlling for factors shown in the literature to influence shorting. We do not find similar effects after sell recommendations. These results suggest that short sellers act to exploit short-term overpricing arising from behavioral biases of some investors.

Additional Information

Hobbs, J. , Keasler, T. R. and McNeil, C. R. (2012), Short Selling Behavior and Mad Money. Financial Review, 47: 65-89. doi:10.1111/j.1540-6288.2011.00321.x. Publisher version of record available at:
Language: English
Date: 2012
short sale, stock recommendations, Mad Money, behavioral bias, overpricing

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