The study examines the extent to which analyst recommendations influence stockprice reactions in the Swedish market, how well the market absorbs eventual information contained within such recommendations, and whether eventual reactions can be explained by information effects or behavioural biases. While previous research has largely focused on the larger international market, limited attention has been given to smaller markets such as Sweden, which is also characterized by high retail investor participation. To investigate this, an event study methodology was applied using analyst “buy” and “sell” recommendations for firms listed on the OMXS30 index between 2021 and 2026. Average abnormal returns (AAR) and mean cumulative abnormal returns (CAAR) were measured over an event window spanning from five trading days before to five trading days after recommendation announcements. Statistical significance was evaluated using t-tests at the conventional level or higher.

The findings suggest that analyst recommendations influence stock price reactions in the Swedish market, particularly on the announcement day. Both “buy” and “sell” recommendations generated statistically significant abnormal returns, with “sell” recommendations producing stronger market reactions. While the market appeared relatively efficient in incorporating analyst information, short-term persistence in cumulative abnormal returns indicates temporary deviations from semi-strong market efficiency.

The study further suggests that information asymmetry and behavioural biases, particularly overconfidence and loss aversion, may help explain observed market reactions. The findings contribute to existing literature by providing evidence from the Swedish market and highlighting the potential importance of retail investor participation in shaping stock price responses to analyst recommendations.