The information content of Morningstar StockInvestor: the Tortoise vs the Hare

Abstract

Purpose

The purpose of this paper is to add to the literature on the impact of the Morningstar ratings by examining the impact of individual stock ratings in the Hare and Tortoise portfolios.

Design/methodology/approach

This study uses an event study approach, where the effect of the information release on stock prices was examined.

Findings

The release of the Hare and the Tortoise portfolios does have a significant impact on the stock prices on the day before the release of the reports. The significant impact of the Hare portfolio appears to be related to risk and growth factors and the new listing of a stock in the portfolio. The significant impact of the Tortoise portfolio appears to be related to growth and a downgrading of the estimated value.

Originality/value

There have been numerous studies on the impact of the Morningstar ratings on mutual funds. This paper adds to that literature by examining the impact of individual stock ratings in the Hare and Tortoise portfolios.

Citation

Ferreira, E.J. and Smith, S.D. (2012), "The information content of Morningstar StockInvestor: the Tortoise vs the Hare", Managerial Finance, Vol. 38 No. 4, pp. 403-413. https://doi.org/10.1108/03074351211207545