Search results

1 – 10 of 423
Article
Publication date: 15 February 2016

Shahed Imam and Crawford Spence

The purpose of this paper is to shed light on the nature of the work that financial analysts actually do in the context of the market for information and to further open up…

3464

Abstract

Purpose

The purpose of this paper is to shed light on the nature of the work that financial analysts actually do in the context of the market for information and to further open up research in this area to qualitative and sociological inquiry.

Design/methodology/approach

A field study with 49 financial analysts (both buy-side and sell-side) was undertaken in order to understand the work that they actually do. This field study was theoretically informed by the sociology of Pierre Bourdieu.

Findings

The authors find, in contrast to both conventional wisdom and assumptions in prior (mostly quantitative) literature, that the primary value of sell-side analyst work lies not in the recommendations that analysts ultimately produce, but in the rich contextual information that they provide to buy-side analysts. In order to successfully provide this information, analysts have to embody large amounts of technical capital into their habitus.

Research limitations/implications

Much research in this area erroneously presumes that forecasting is the primary function of analysts. Analyst work needs to be understood as multifarious and requiring a well-developed habitus that is attuned to the accumulation of both technical and social capital. Future qualitative research might usefully explore in more detail the way in which corporate managers interact with analysts. The present study solicits the viewpoints only of the analysts themselves. The organisational context of the analysts was not explored in detail and the interviews were pre-crisis, which possibly explains why the technical capital of sell-side analysts was extolled by interviewees rather than lambasted.

Originality/value

The paper is one of few studies to look at analysts from a qualitative and sociological perspective. It both complements and extends both emerging sociological work on financial intermediaries and qualitative work on the “market for information”.

Details

Accounting, Auditing & Accountability Journal, vol. 29 no. 2
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 3 February 2022

Emre Tarim

This paper aims to explore how sell-side analysts and salespeople make sense of uncertainty on their market knowledge, valuation and marketing outputs.

Abstract

Purpose

This paper aims to explore how sell-side analysts and salespeople make sense of uncertainty on their market knowledge, valuation and marketing outputs.

Design/methodology/approach

Data is collected by direct observations of and interviews with analysts and salespeople in the Turkish stock exchange, an emerging market with considerable global fund management activity.

Findings

Analysts face considerable uncertainty on their market value forecasts but dismiss it as local dynamics not incorporable to valuation practices in global sell-side business. Salespeople, despite paying more attention to such dynamics owing to their sales tasks, limit themselves to analyst output in marketing. Both actors recognise the importance of analyst work to be able to have “a right to speak” in global sell-side business.

Research limitations/implications

Changing market conditions and regulations since the time of study have been shaping analysts and salespeople work in global sell-side business, for example, the way sell-side is compensated by buy-side, buy-side’s move to receiving sell-side services from fewer brokers and hence shrinking sell-side teams. The paper does not address these. Nonetheless, it shows how valuation and marketing can be two distinct lines of work in sell-side business irrespective of market conditions and raises the question for future research as to how sell-side professionals manage this distinction, and how they make sense of and cope with broad market dynamics beyond sell-side and buy-side relations (e.g. automated trading machines, online retail trading).

Originality/value

The paper provides rare observation-based insights into analyst and salespeople work, including their sensemaking of uncertainty. It shows the importance of market identities and associated knowledge in valuation and marketing work in sell-side business.

Details

Qualitative Research in Financial Markets, vol. 14 no. 4
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 17 April 2009

Subhash Abhayawansa and Indra Abeysekera

Research on the use/disclosure of intellectual capital (IC) information by sell‐side analysts, using content analysis of their reports, is growing. This paper aims to establish…

1619

Abstract

Purpose

Research on the use/disclosure of intellectual capital (IC) information by sell‐side analysts, using content analysis of their reports, is growing. This paper aims to establish the importance of this perspective in understanding the role of IC in communicating firm value, to introduce possible theoretical frameworks to interpret the findings of such studies, and to propose methodological developments.

Design/methodology/approach

The paper argues for the need to look at IC from the perspective of sell‐side analysts, and then advocates the use of several theoretical frameworks to enrich current understanding of the role of IC as it is used/disclosed by sell‐side analysts. Current methodologies used in this type of research are critiqued with a view to proposing multiple research methods.

Findings

Looking at IC from the sell‐side analyst perspective helps us to understand how the capital market appreciates this information. However, IC information that analysts disclose cannot be taken at its face value. Issues of signalling, analysts' incentives/influences, political economy view and globalisation are introduced as providing theoretical frameworks for explaining IC disclosure in sell‐side analysts' reports. To obtain a richer picture of the role of IC information in analysts' decision processes, multiple research methods are proposed.

Practical implications

The proposals in this paper may inform and guide future research on IC information use/disclosure by sell‐side analysts with theoretical underpinnings and methodological rigour.

Originality/value

This paper is the first attempt to propose possible theories for interpreting findings of studies on IC use/discsloure by sell‐side analysts and suggest multiple research methodologies in this type of research.

Details

Journal of Intellectual Capital, vol. 10 no. 2
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 3 April 2020

Ameen Qasem, Norhani Aripin and Wan Nordin Wan-Hussin

The purpose of this paper is to examine the influence of financial restatements on the sell-side analysts' stock recommendations.

Abstract

Purpose

The purpose of this paper is to examine the influence of financial restatements on the sell-side analysts' stock recommendations.

Design/methodology/approach

The sample of this study is based on a dataset from a panel of 246 Malaysian public listed companies for the period 2008 to 2013 (651 company-year observations). This study employs feasible generalized least squares regression.

Findings

This study finds a negative and significant relationship between restated companies and sell-side analysts' stock recommendations, which means that sell-side analysts issue less favorable stock recommendations for restated companies.

Practical implications

The findings based on observations from an emerging economy complement the results of the US studies that analysts revise their earnings forecasts or recommendations downwards or drop coverage following financial restatements. The results of this study should be useful to capital market participants in understanding how analysts perceive and evaluate restated companies.

Originality/value

This paper expands the literature on financial restatements consequences in an emerging market which is largely unstudied. Prior research on analyst behavior towards restatements has focused on the consequences of restatements in terms of analyst following and forecast accuracy and dispersion. This study examines if and how the restatements affect the analysts' final output as reflected in the recommendation opinion, an area that has so far received little attention.

Details

International Journal of Managerial Finance, vol. 16 no. 4
Type: Research Article
ISSN: 1743-9132

Keywords

Article
Publication date: 16 May 2023

Barry Hettler, Justyna Skomra and Arno Forst

Motivated by significant global developments affecting the sell-side industry, in particular a shift toward passive investments and growing regulation, this study examines whether…

Abstract

Purpose

Motivated by significant global developments affecting the sell-side industry, in particular a shift toward passive investments and growing regulation, this study examines whether financial analyst coverage declined over the past decade and if any loss of analyst coverage is associated with a change in forecast accuracy.

Design/methodology/approach

After investigating, and confirming, a general decline in analyst following, the authors calculate the loss of analyst coverage relative to the firm-specific maximum between 2009 and 2013. In multivariate analyses, the authors then examine whether this loss of coverage differs across geographic region, firm size and capital market development, and whether it is associated with consensus analyst accuracy.

Findings

Results indicate that between 2011 and 2021, firm-specific analyst coverage globally declined 17.8%, while the decline in the EU was an even greater, 28.5%. Within the EU, results are most pronounced for small-cap firms. As a consequence of the loss of coverage, the authors observe a global decline in forecast accuracy, with EU small-cap firms and firms domiciled in EU non-developed capital markets faring the worst.

Originality/value

This study is the first to document a concerning global decline in analyst coverage over the past decade. The study results provide broad-based empirical support for anecdotal reports that smaller firms in the EU and those in EU non-developed capital markets bear the brunt of consequences stemming from changes in the sell-side analyst industry.

Details

Accounting Research Journal, vol. 36 no. 2/3
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 1 October 2006

Per Flöstrand

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…

1999

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

Journal of Intellectual Capital, vol. 7 no. 4
Type: Research Article
ISSN: 1469-1930

Keywords

Article
Publication date: 7 September 2010

Subhash Abhayawansa and James Guthrie

The purpose of this paper is to review and synthesise current knowledge on the importance of intellectual capital (IC) information to the capital market.

2131

Abstract

Purpose

The purpose of this paper is to review and synthesise current knowledge on the importance of intellectual capital (IC) information to the capital market.

Design/methodology/approach

The paper is by way of literature review. It reviews the empirical research literature from different methodological strands and synthesises the findings to provide evidence on the impact/importance/usefulness of IC from a capital markets perspective.

Findings

Importance of IC information has been examined using various research methods including capital markets research, questionnaire surveys, face‐to‐face interviews, experimentations, verbal protocol analysis and content analysis of analyst reports. These studies provide evidence on the usefulness/importance of many types of IC information. Also, evidence from IC disclosure studies on initial public offering prospectuses sheds light on perceived importance of types of IC information to the capital market. However, there is a scope for more research to refine the current understanding of the importance of IC to the capital market.

Practical implications

By reviewing and synthesising the literature, this paper provides an important source of reference for future researchers and policy makers who wish to formulate guidelines for IC reporting to better meet the information needs of capital market actors. It also highlights future research directions.

Originality/value

This is the first‐published literature review on the importance of IC that provides a comprehensive review of studies adopting various research methods. Prior reviews have been limited to value‐relevance and/or predictive ability studies.

Details

Journal of Human Resource Costing & Accounting, vol. 14 no. 3
Type: Research Article
ISSN: 1401-338X

Keywords

Article
Publication date: 12 February 2019

Souhir Khemir

The purpose of this paper is to explore the perception of environmental, social and governance (ESG) criteria by mainstream investors in an emerging financial market, that of…

1437

Abstract

Purpose

The purpose of this paper is to explore the perception of environmental, social and governance (ESG) criteria by mainstream investors in an emerging financial market, that of Tunisia, country at the origin of the Arab Spring.

Design/methodology/approach

A series of focus groups and semi-structured interviews were conducted with financial professionals.

Findings

Despite efforts by the Tunisian state to promote CSR and ESG criteria since the outbreak of the revolution of January 14th, 2011, the results show that these criteria are fairly well known by our interlocutors. As part of an investment allocation decision, the ESG criteria are considered as secondary to financial ones. The three criteria are classified as follows according to their usefulness in the investment choices of financial professionals: corporate governance, social and environmental.

Research limitations/implications

In addition to the subjective nature of the data collected, this research is limited to the input of only financial professionals. It does not inform us about ESG indicators that may influence the investment decisions of financial professionals, and thus this issue deserves further reflection.

Originality/value

This exploratory study sheds light on a little-explored topic in Tunisia, country at the origin of the Arab Spring. It contributes to the existing literature in the areas of investor behavior toward ESG criteria and adds to the limited literature in the area of emerging countries.

Details

International Journal of Emerging Markets, vol. 14 no. 5
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 5 April 2011

Per Nikolaj Bukh and Christian Nielsen

The purpose of this paper is to study the role of strategic information in the process of analyzing and understanding a specific company. Special emphasis is given to how…

1172

Abstract

Purpose

The purpose of this paper is to study the role of strategic information in the process of analyzing and understanding a specific company. Special emphasis is given to how forward‐looking information becomes important in relation to establishing a perception of market value by financial sell‐side analysts.

Design/methodology/approach

The empirical part of the paper is based on semi‐structured interviews with financial analysts, fund managers, and the top management team from a large medical device company listed on a Scandinavian Stock Exchange. The case company is internationally renowned for its state‐of‐the‐art business reporting.

Findings

It is shown how the three parties produce and consume strategic information and apply it in the process of analyzing and understanding the company and how strategic information plays markedly different roles across the groups participating in the market for information. It was specifically found that understanding the stock price and the company were two distinctly different issues. While management and the long‐term oriented sell‐side analysts' interests related to the company, fund managers and so‐called trigger‐oriented sell‐side analysts were primarily concerned with predicting the stock price.

Research limitations/implications

This study motivates for a more nuanced understanding of how strategic information is applied in investment decisions, thereby extending existing research. As the case company is considered a best practice case, there are limitations to its generalizability.

Practical implications

The results of this study may help companies in their quest for creating transparency around their business model and how to address the different informational needs of the capital market.

Originality/value

This study provides new insights to further the understanding of how information is moved into investment decisions and thus may form the basis of further studies into this field.

Details

Journal of Human Resource Costing & Accounting, vol. 15 no. 1
Type: Research Article
ISSN: 1401-338X

Keywords

Article
Publication date: 10 June 2020

Patric Andersson, Johan Graaf and Niclas Hellman

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

Abstract

Purpose

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

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

Qualitative Research in Financial Markets, vol. 12 no. 4
Type: Research Article
ISSN: 1755-4179

Keywords

1 – 10 of 423