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The recommendation of the analyst report is not only limited to a small number of ratings, but also biased toward a buy opinion with the absence of sell opinion. As an alternative to this, this paper aims to extract analysts' textual opinions embedded in the report body through text analysis and examine the profitability of investment strategies. Analyst opinion about a firm is measured by calculating the frequency of positive and negative words in the report text through the Korean sentiment lexicon for finance (KOSELF). To verify the usefulness of textual opinions, the author constructs a calendar-time based portfolios by the analysts' textual opinion variable of each stock. When opinion level is used, investment strategy has no significant hedged portfolio return. However, hedged portfolio constructed by opinion change shows significant return of 0.117% per day (2.57% per month). In addition, the hedged return increases to 0.163% per day (3.59% per month) when the opening price is used instead of closing price. This study show that the analysts’ opinion extracted from text analysis contains more detailed spectrum than recommendation and investment strategies using them give significant returns.

This paper aims to investigate how sell-side analysts form expectations on, analyse, and communicate the effects of corporate acquisitions.

The paper reports on case studies of three listed firms who are frequent acquirers. The case data comprise semi-structured interviews and content analysis of analyst reports and corporate reports.

The paper reports three sets of findings. First, the analysts viewed acquisitions as heterogeneous events and, therefore, also treated acquisitions differently depending on factors such as size and acquisition strategy and the perceived “authenticity” of the acquisition (i.e. whether parts of the acquisition would be more accurately described as organic growth and regular capital expenditure (CAPEX) investments). Second, the authors find that analysts struggle with analysing the effects of acquisitions at the announcement date because of a mismatch between the analysts’ need of and the analysts’ access to relevant information. Although clients demand evaluations of announced acquisitions, relevant accounting information is not published until much later and the information at hand only allows for cursory analyses. Finally, the authors find that the analysts’ valuation models were too inflexible to fully incorporate the effects of the acquisition. In sum, the analysts, therefore, developed acquisition-driven investment cases without supporting accounting information and without converting expected acquisitions into forecasts.

By adopting a qualitative case study research design, the paper contributes to the ongoing efforts to open the “black-box” of sell-side analyst behaviour. In particular, the unique research design focusses on effects related to specific corporate events (acquisitions) rather than analysts’ everyday work.

The purpose of this paper is to contribute to scholarly work on the role of sell-side financial analysts in corporate governance (CG). It examines the more recent work products pertaining specifically to CG that analysts based in the USA and UK have generated in the past two decades, namely, their CGCG reports. Specifically, this paper focusses on analysing how analyst CG reports constitute a comparative space in which the governance procedures of companies are evaluated and “best practices” are created.

This study involves a social constructivist textual analysis of 48 CG reports produced by analysts based in the USA and UK between 1998 and 2009.

Analyst CG reports textually construct a comparative space comprising four dimensions. First, the space is constructed for some carefully edited users to evaluate the governance of companies. Second, the construction of this space requires the selection of “building materials”, i.e., governance issues included in the space that render companies amenable to evaluation and comparison. Third, by linking the range of governance issues chosen to formal regulations, firms are rendered governable and regulatory requirements reinterpreted. Lastly, by using different types of inscriptions, such as narratives and tables, the space highlights “winners”, i.e., those companies which do better than others, and constructs their governance procedures as “best practices”.

This research provides a first step towards an in-depth understanding of analyst CG reports. The insights from this paper generate a range of areas for future research, including how these reports are produced and used.

This paper adds to the existing literature focussing on the role of analysts in CG. It extends previous studies by examining the more recent and debatable work products generated by analysts, namely, their CG reports, and suggests an extended CG role for them. Theoretically, analyst CG reports are conceptualised as “inscriptions” that construct “documentary reality”. The notion of “editing” is also drawn upon, to analyse a particular way in which documentary reality is constructed. Accordingly, this paper broadens the theoretical perspectives used in CG research.

The purpose of this paper is to investigate what and how intellectual capital information (ICI) conveyed through analyst reports varies by the type of stock recommendation. It draws on the theory of impression management.

Content analysis is used to investigate ICI in the full text of sell‐side analysts’ initiating coverage reports. It categorises ICI by type and three qualitative characteristics: evidence; time orientation; and news‐tenor. It explores how the extent, types and qualitative characteristics of ICI found in analyst reports vary by the type of stock recommendation accompanying the analyst report.

Given the conflicting interests facing analysts and relative amenability of ICI, it was found that analysts use ICI to manage perceptions. In particular, analysts attempt to use ICI in their reports to subdue the pessimism associated with an unfavourable recommendation, increase credibility of favourable recommendations and distinguish sell from hold recommendations.

The paper contributes to the literature on impression management by extending its application to the study of sell‐side analysts’ decision processes and it alerts future researchers to the wider role played by ICI beyond its use in generation of forecasts and valuations. The paper's findings have implications for consumers of analyst reports, as the level of negativity/positivity of forecasts and recommendations may be altered as a result of the semantics associated with ICI.

This paper explores analysts’ use of ICI conditional on the type of stock recommendation accompanying the report. Findings are explained using the theory of impression management.

The purpose of this paper is to describe a methodology that enables the generation of valid and reliable inferences on what and how intellectual capital (IC) information is communicated by sell‐side analysts in their research reports.

The method described in this paper involves content‐analysing initiating coverage analyst reports using a four‐dimensional IC coding framework and a detailed coding instrument, which is founded in the literature and indigenous to analyst reports. The paper explicates methodological decisions associated with content analysis: selecting the appropriate sampling unit; recording unit and measurement unit; developing the categorisation scheme and coding instrument; the need for test coding; the approach to data collection; and assessment of reliability and validity.

The methodology described is applied to a sample of analyst reports to illustrate inferences that can be drawn on what and how IC information is communicated in analyst reports.

Various practical issues arising in the application of content analysis method are discussed and a methodology for investigating IC communications by sell‐side analysts is described in this paper. This knowledge can be useful to future researchers conducting content‐analytic studies involving analyst reports in general, and IC communications in analyst reports in particular.

This paper extends the methodology developed previously to examine IC information in analyst reports. Although inspired and heavily influenced by these works, the methodology presented in this paper differs from theirs on several fronts. The paper introduces an alternative methodological paradigm to the study of analyst reports by emphasising them as a communication medium through which sell‐side analysts may pursue an agenda of their own. This is contrasted with the view held by several prior researchers that analyst reports just provide a record of analysts' thought processes.

This paper aims to understand the potential usefulness of sell-side analysts’ investment recommendation reports as a medium for communicating intellectual capital (IC) information. It explores the manner in which analyst reports supply IC information and the types of companies in relation to which analyst reports supply most IC information.

A content analysis of 64 initiating coverage analyst reports written on Australian companies is performed. The content analysis focuses on three semantic properties of IC disclosures: format (i.e. discursive, numerical-non-monetary, numerical-monetary and visual), news-tenor (i.e. positive, neutral and negative) and time-orientation (i.e. forward-looking, non-time-specific and past-oriented). The paper investigates whether analyst reports contain more IC information on companies providing less IC information through their own channels. For this, the authors test the hypothesised relationship between the extent of IC information and the IC intensity of the analysed company’s sector and the systematic risk of the company.

IC information in analyst reports is more discursive than numerical, not significantly more forward-looking in general and balanced between negative or neutral and positive attributions (except for information on company management). However, compared to the semantic properties of corporate reporting media, analyst reports in this study communicate IC information in a manner arguably more useful to investors. A company’s systematic risk and sector in which the company operates are associated with the extent of IC information in analyst reports. The findings indicate that analysts’ contribution as an IC information provider is greatest for companies providing less IC information directly to the public.

The results have implications for policymakers contemplating reforming non-financial reporting regulation and ensuring a level playing field for investors and companies when determining corporate IC disclosure strategy and strategies for investor relations.

This is the first study to explore semantic properties and drivers of IC information in analysts’ initiating coverage reports. This paper highlights the importance of analyst reports as a medium for communicating IC information that could complement corporate communication media.

Research has called for increased relevance of business reporting. A step towards that goal is an increased disclosure of non‐financial information. At the present time, non‐financial information is mostly provided on a voluntary basis.

Valuation relevance of non‐financial information is studied by examining the information content of 200 analyst reports written on a respective number of firms listed in the S&P 500 index, while simultaneously performing a disclosure study of non‐financial information by the same 200 firms in their annual reports.

We found the valuation relevance of non‐financial information to be related to the size of the target firm. Further, analysts’ use of non‐financial information is related to the level of non‐financial information in the 10‐k report of the target firm. Finally, analysts tend to rely more heavily on forward‐looking non‐financial information than on historical non‐financial information.

The findings in this paper have implications for policy makers, preparers of business reporting, and others having to make judgments on information usefulness.

This study looks at the valuation relevance of non‐financial information, as opposed to earlier studies that have judged the usefulness of non‐financial information by measuring its value relevance. Information is regarded to have valuation relevance if it is used by analysts in the valuation process. Hence, valuation relevance offers an alternative way of measuring information usefulness.

The objective of this paper is to examine the use of indicators of intellectual capital (IC) by financial analysts employed by brokerage firms, so‐called “sell‐side analysts”, and based on the findings draw conclusions on the perceived usefulness of different categories of indicators.

The basis for the paper is a content analysis of 250 sell‐side financial analyst reports written on a respective number of randomly selected S&P 500 companies. The study describes the use of IC information as leading indicators of future performance and identifies the contextual factors related to the use of such indicators.

The results reveal frequent use of IC indicators in analyst reports. Statistical analysis of the results indicates industry to be a contextual factor that is significantly related to the number of indicators used. Moreover, a majority of the IC indicators refer to relational capital, whereas indicators on human and structural capital are less frequent.

Information on the use of IC indicators is relevant to companies in their information disclosure process. Furthermore, understanding the behavior of users of financial information facilitates the work of standard setters.

The purpose of this paper is to investigate whether there is any difference across individual investors, domestic and foreign institutional investors in trading volume responses to analyst reports. The authors also examine the determinants of trading volume responses using firm as well as forecast characteristics.

The authors use trading data from the Korean equity market. The authors divide investors into three classes of investors; namely, individual investors, domestic institutional investors, and foreign institutional investors. The authors then examine whether the trading responses to analyst reports vary across investor types, and how firm characteristics and characteristics of analyst reports influence the trading activities on the release dates across investor types.

Individual investors are the most responsive investor group, being responsive to analyst reports on small, neglected firms with large inside ownership as well as to analyst reports with optimistic forecasts. Domestic institutional investors are responsive to reports on neglected firms with high return volatility while foreign institutional investors show least responses.

There are few studies that investigate whether the trading responses to analyst reports vary across investor types and how firm characteristics and characteristics of analyst reports influence the trading activities on the release dates across investor types. Taking advantage of the trading volume data for the three main investor types in the Korean stock market, the authors study the trading volume responses for each investor type and make comparisons across investor types.

The main objective of the paper is to examine and evaluate how security analysts in Thailand and Malaysia appraise ordinary shares and what sources of information they use. A questionnaire was sent to 570 sell‐side Thai securities analysts working for 63 stock brokering firms, and to 160 Malaysian analysts working for a sample of 24 stock brokering firms. Responses were received from 191 Thai analysts and 75 Malaysian analysts. The results reinforce and support our expectation that fundamental analysis is the primary method of investment appraisal. Of the Thai analysts, 147 (77 per cent) reported that fundamental analysis is ‘almost always’ used to value common stocks and a further 38 (nearly 20 per cent) reported that they ‘usually’ use fundamental analysis. Similarly, 73 per cent of Malaysian respondents indicated that fundamental analysis is almost always used and a further 18 per cent usually use it as a basis for valuing common stocks. The results also reveal that both groups rate profit and loss account, balance sheet, half‐yearly results, company annual report, and company visits as the most important sources of information. In terms of relative importance, Thai analysts view company visits as the most important source, while their Malaysian counterparts rate the profit and loss account first.