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Article
Publication date: 26 January 2023

Ahmad Usman Shahid, Hafiza Sobia Tufail, Hafiz Yasir Ali and Joane Jonathan

This paper aims to contribute to the corporate social responsibility (CSR) literature by providing holistic insights into financial analysts’ personal values, perceived…

Abstract

Purpose

This paper aims to contribute to the corporate social responsibility (CSR) literature by providing holistic insights into financial analysts’ personal values, perceived behavioural risk and investment decisions relating to the social aspects of CSR. Specifically, this paper examines whether analysts’ personal values, such as religiosity, spirituality and social consciousness, influence their investment decisions relating to a highly profitable firm that is alleged of exploiting labour rights. This study also examines the mediating role of analysts’ perceived behavioural risk between personal values and investment decisions.

Design/methodology/approach

Data were collected, using a scenario-based survey, from 145 financial analysts at both public and private companies in Pakistan.

Findings

The results show that analysts’ values, including religiosity, spirituality and social consciousness, have a significant negative impact on their investment decisions. The results also demonstrate that perceived behavioural risk mediates the relationship between these values and investment decisions.

Practical implications

This study has implications for the globalised business world, regulators and researchers for incorporating personal and ethical values into risk and investment decision-making.

Originality/value

This study establishes the importance of analysts’ personal values in risky investment decision-making.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 1 July 2003

Andreas Krause

Recent evidence suggests that financial analysts have substantial conflicts of interest when publishing their research reports. We argue that not only investors but also…

Abstract

Recent evidence suggests that financial analysts have substantial conflicts of interest when publishing their research reports. We argue that not only investors but also listed companies benefit from analyst coverage and suggest that the financial burden of such coverage be shifted entirely to those companies. This article presents a detailed evaluation of a not‐widely‐known proposal that stock exchanges ensure analyst coverage for the companies they list through a levy on their listing fees. We discuss key aspects of the regulatory framework required to ensure the independence of these financial analysts as well as some of its shortcomings. We conclude that this proposal has the potential to ensure the independence of financial analysts more efficiently than the current regulatory approach does.

Details

Journal of Investment Compliance, vol. 4 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 1 February 1997

G. Daryl Nord and Jeretta Horn Nord

A principal participant in developing computer‐based information systems is the systems analyst. A wide range of skills and knowledge requirements seems to be necessary to…

2236

Abstract

A principal participant in developing computer‐based information systems is the systems analyst. A wide range of skills and knowledge requirements seems to be necessary to be a systems analyst. To date, few studies have attempted to identify the specific skills that analysts indicate are critical to their success during the systems development life‐cycle process. Identifies and investigates the characteristics of a successful systems analyst’s domain and knowledge base. Specifically, groups domain knowledge into four major categories: technical skills, systems skills, managerial skills, and business skills. From within each category, analysts indicated which skills they perceived to be of importance to perform their job functions as systems analysts successfully. The results help identify the educational and training requirements for future systems analysts that need to be in place for both academic and corporate instructional programmes.

Details

Industrial Management & Data Systems, vol. 97 no. 1
Type: Research Article
ISSN: 0263-5577

Keywords

Article
Publication date: 1 June 2000

Steven R. Ferraro and Darrol J. Stanley

Briefly reviews previous research on the value of investment advisors’ recommendations and presents a study comparing portfolio returns from analysts’ recommendations in…

Abstract

Briefly reviews previous research on the value of investment advisors’ recommendations and presents a study comparing portfolio returns from analysts’ recommendations in the Wall Street Journal’s “Dartboard” contest 1990‐1996, four randomly selected shares and the Dow Jones Industrial Average. Finds the analysts’ portfolio has the highest average returns and standard deviation; and that although some individual analysts have excellent scores in the contest, this is inversely related to the number of times they participate. Suggests that they do not significantly outperform other portfolios, but that contest winners’ tips have significant effects on the market, especially for non‐listed shares. Assesses the implications of the results for the efficient market hypothesis and the share prices of firms with higher asymmetric information.

Details

Managerial Finance, vol. 26 no. 6
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 1 December 2022

Zhiying Hu, Yan Li, Beixin Lin and Gary Kleinman

The purpose of this study is to investigate the decision usefulness of key audit matters (KAMs) disclosures from the perspective of financial analysts.

Abstract

Purpose

The purpose of this study is to investigate the decision usefulness of key audit matters (KAMs) disclosures from the perspective of financial analysts.

Design/methodology/approach

Using data from two groups of Chinese-listed firms subject to different audit standards, the authors use a quasi-natural experiment and the difference-in-differences approach to examine the impact of KAMs on analyst forecasts. The authors also conduct a textual analysis on management disclosures as well as on the content of KAM disclosures.

Findings

The results of this study show that both forecast errors and dispersion have significantly declined for the firms disclosing KAMs compared to the firms without such disclosures. Further analysis presents evidence that KAM disclosures have resulted in simultaneous increase in management disclosures and audit quality. In addition, auditor characteristics, such as auditor’s dependence on client fees and its industry specialization, and firm’s characteristics, such as its ownership structure and its social connection with the auditor, appear to affect the informativeness of KAM disclosures. The authors also perform content analysis of KAMs to provide additional insight.

Research limitations/implications

As AH firms are required to adopt the expanded audit report one year before A shares firms, by design, there is only one year in which these two types of companies differ. Therefore, the results without overgeneralizing the impact of KAM disclosures should be interpreted. In addition, this study involves the Chinese market alone and, therefore, may be affected by factors peculiar to the functioning of the Chinese economy and financial markets.

Originality/value

The main contribution of this study lies in highlighting the salience of KAM context in shaping the relationship between auditors, managers and analysts and its collective impact on information environment. The findings of this study are significant in that they help establish the importance of KAM disclosures in helping to assure that higher quality financial information is available to capital markets, as well as information that is otherwise unavailable given disclosure mandates in China. This study adds to the literature on the importance of providing additional means of safeguarding auditor independence and on the value of auditor expertise in providing useful content in audit disclosures. Moreover, the findings suggest that the expanded audit report can help reduce the level of asymmetric information, especially for state-owned entities. They provide insight on how the new audit rule influences managers and auditors communicating complex accounting matters as well as the moderating effect of the social connections between auditors and firm executives.

Details

Managerial Auditing Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 7 October 2022

Innocent Okwuosa and Jill Atkins

The purpose of the study is to explain why there is a conflict in the meaningfulness of integrated reporting (IR) between International Integrated Reporting Council (IIRC…

Abstract

Purpose

The purpose of the study is to explain why there is a conflict in the meaningfulness of integrated reporting (IR) between International Integrated Reporting Council (IIRC) and analysts and institutional investors using framing theory and suggest a way forward for a meaningful IR to analysts and institutional investors.

Design/methodology/approach

The study used qualitative research design in which data was collected from IIRC's document and 21 semi-structured interviews of analysts and fund managers conducted between 2014 and 2015 after the introduction of IIRC framework. This period coincided with prior studies that provide conflicting evidence over the meaningfulness of IR between IIRC and analysts and fund managers.

Findings

The findings show that the IIRC from inception uses a preparer-centred frame where it predominantly interprets IR as meaningful from the perspective of preparers of information under ideal conditions, and as such also meaningful to fund managers and analysts. On the other hand, the fund managers and analysts from the onset use a user-centred frame where they interpret IR as not meaningful from their perspective as users of the information under pragmatic conditions. The context making it difficult to reconcile the differentiated frames are the timeframe; absence of trust relationship and balance in reporting.

Research limitations/implications

The study is limited by its qualitative nature meaning that generalisation of findings may not apply. Its data is also limited to IIRC IR Framework, analysts and fund managers as opposed to wider stakeholders.

Practical implications

The practical implication of the findings suggests that if IR is to be made meaningful to analysts and fund managers, the promoters must reconcile the differentiations in frames employed by both the IIRC, analysts and institutional investors. Without this reconciliation IR may not serve the information needs of the intended primary users.

Originality/value

The study uses framing theory to show that time frame, emotional connectedness and data financialisation are attributes that make IR to be considered meaningful to analysts and fund managers. In addition, it provides insight into how the use of organisational and market context influences the framing of the meaningfulness of IR.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Book part
Publication date: 25 August 2022

Dipankar Ghosh and Lori Olsen

Financial analysts' forecasts serve as a proxy for market earnings expectations, and research provides mixed evidence of the relation between financial analysts' expertise…

Abstract

Financial analysts' forecasts serve as a proxy for market earnings expectations, and research provides mixed evidence of the relation between financial analysts' expertise and forecast accuracy. The judgment and decision-making (J/DM) literature suggests that those with more expertise will not perform better when tasks exhibit either extremely high or extremely low complexity. Expertise is expected to contribute to superior performance for tasks between these two extremes. Using archival data, this research examines the effect of analysts' expertise on forecasting performance by taking into consideration the forecasting task's complexity. Results indicate that expertise is not an explanatory factor for forecast accuracy when the forecasting task's complexity is extremely high or low. However, when task complexity falls between these two extremes, expertise is a significant explanatory variable of forecast accuracy. Both results are consistent with our expectations.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-80382-802-2

Keywords

Book part
Publication date: 24 March 2017

Anne H. Bowers, Henrich R. Greve and Hitoshi Mitsuhashi

Using data from securities analysts, who are awarded status by the third-party organization Institutional Investor magazine, we examine the emergence of competition and…

Abstract

Using data from securities analysts, who are awarded status by the third-party organization Institutional Investor magazine, we examine the emergence of competition and articulate a model of competitive response among actors aware of the importance of status and some of the dimensions on which it may be gained. We predict analysts’ initiating or ceasing coverage of stocks in response to other analysts initiating coverage on stocks they cover. We find that competition can emerge because of status seeking rather than as a response to own capabilities or market needs, with compelling, and potentially negative, market implications for overt status seeking.

Book part
Publication date: 20 June 2005

Frank Dobbin and Dirk Zorn

The bankruptcy of Enron in December 2001 marked the beginning of broad awareness that American corporations had left behind the strategy of expanding through…

Abstract

The bankruptcy of Enron in December 2001 marked the beginning of broad awareness that American corporations had left behind the strategy of expanding through diversification that was the hallmark of the 1950s through the early 1980s. CEOs now made it job one to meet the earnings projections of securities analysts, such that by the year 2000 they were, in record numbers, “restating earnings” – admitting that they had cooked the books. Accounting shenanigans were the tip of the iceberg, and what lay under the water was a new approach to running the corporation to produce numbers that analysts and institutional investors would like. Three groups that stood to benefit from the new strategy spun it to investors as in the interest of all. Managers of hostile takeover firms defined their business as setting firms on the path to performing for shareholders. Institutional investors defined earnings management, rather than acquisitions management, as increasing shareholder value and focused management attention on earnings by popularizing stock options. Securities analysts hawked their own profit projections as the reigning metric of corporate performance, and favored easy-to-analyze single-industry firms through “buy” recommendations. These three groups changed the incentives executives faced, making accounting shenanigans in the pursuit of earnings management widely popular and enriching institutional investors, analysts, and executives in the process. Regulatory changes to end malfeasance have made it marginally more difficult to perform illegal accounting practices, but they have not changed the core corporate strategy that has emerged since the early 1980s. The changes illuminate the rise of groups of business professionals in the power structure, for it was not investors but different groups of business professionals who won the day. The changes illuminate, as well, the role of the social construction of interest in power relations among groups – it was by convincing executives and shareholders that a new corporate strategy was in their own interest, which these business professionals succeeded.

Details

Political Power and Social Theory
Type: Book
ISBN: 978-1-84950-335-8

Article
Publication date: 10 October 2022

Anne Fortin and Sylvie Héroux

The purpose of this study is to examine how financial analysts deal with cybersecurity information in their investment analysis process and whether they find cybersecurity…

Abstract

Purpose

The purpose of this study is to examine how financial analysts deal with cybersecurity information in their investment analysis process and whether they find cybersecurity disclosures in companies’ financial reports useful.

Design/methodology/approach

Investment managers/financial analysts and chief information security officers (CISOs) at seven institutional investors were interviewed.

Findings

Not all financial analysts consider cybersecurity risk in their investment analyses. Those who do look at company strategy, how the company integrates cybersecurity into its processes and whether it has certified its cybersecurity information. The financial analysts use this qualitative information to adjust the results of their quantitative analysis. They do not find boilerplate or cursory cybersecurity information in financial reports to be useful. In fact, they view it as unreliable and prefer drawing on other information sources to assess the company’s cybersecurity risk.

Practical implications

The results of this study highlight to securities regulators that reported cybersecurity information is of limited usefulness. Regulators are challenged to revisit their disclosure requirements. Companies wishing to improve the usefulness of their cybersecurity information should provide more company-specific information.

Originality/value

To the best of the authors’ knowledge, this study is the first to look at financial analysts’ perception of cybersecurity-related information. It complements findings from prior market studies by adding new insights into the way influential market participants deal with this information in their investment analysis process.

Details

Information & Computer Security, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2056-4961

Keywords

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