Abstract:

The aim of this research was to investigate the impact of stock buy-sell recommendations of brokerage houses on the stock returns of banks operating in Borsa Istanbul (BIST). Accordingly, it has been attempted to assess if investors can receive abnormal returns in accordance with the recommendations of brokerage houses using the case study technique. The validity of the semi-strong effective form of investors who made a buying-selling decision based on brokerage house recommendations was investigated. The returns of the banks' stocks were obtained from the data-stream database. The study evaluated buy-sell recommendations for four large brokerage houses and analyzed data from January 2018 through December 2020. The event study method was used, and t-test was performed in order to determine the difference of abnormal returns from zero in the research. As a result of the research, a negative abnormal return was determined on the day of the event and the day after the sell recommendation was given. Besides, a positive abnormal return was determined on the day before the announcement and on the day of the event in the bank stocks on which buy recommendation has been given. In this respect, the average abnormal and cumulative abnormal returns indicated that BIST was not an efficient market in a semi-strong form for the banking sector. When the sell recommendations and their effects are examined within the scope of the research, it is seen that the day before [-1] p=0.016 value was obtained, on the day, [0] p=0.018 value was obtained, the next day and two days later [+1, +2] p=0.077 and 0.046 values were obtained. On the other hand, when the buy recommendations and their effects are examined, it is seen that the day before [-1] p=0.000 and on the day [0] p=0.098 values were obtained. T-test results and p values show that brokerage house recommendations are effective on stock returns in the BIST banking sector, and therefore BIST banking sector is effective in a weak form. The obtained results of the study were crucial for investors who invested in short-term stocks.

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