Do following celebrity investors earn abnormal returns? : A study from Oslo Stock Exchange (OSE)

Abstract

The main purpose of this thesis is to study the possibility of earning abnormal returns by following celebrity investor transactions. It could appear through the media that there is a general consensus that financial celebrities have an impact on stock prices. We address this issue by studying a handpicked selection of celebrity investor transactions on the Oslo Stock Exchange in the period from 2006 to 2016. We find that stocks that are traded by celebrity investors earn abnormal returns in the short-term. However, our results are not significant. Thus, our results can only imply that there exist a possible celebrity premium and that the celebrity trading, because of a market under reaction, affect stock prices. The market under reaction may be caused by a number of possible factors. We have in our study chosen to address the following potential factors to explain the possible market under reaction: Price drift, insider trading, investor overconfidence, herding and media.