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Article
Publication date: 17 April 2009

Subhash Abhayawansa and Indra Abeysekera

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

Abstract

Purpose

Research on the use/disclosure of intellectual capital (IC) information by sellside 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 sellside 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 sellside 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 sellside 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 sellside 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 sellside 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 sellside 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

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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…

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

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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

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Article
Publication date: 1 October 2005

Joseph Saluzzi

To explain that, unlike with Sarbanes‐Oxley, relatively low‐cost technologies and procedures are becoming widely accepted for helping institutional money managers and…

Abstract

Purpose

To explain that, unlike with Sarbanes‐Oxley, relatively low‐cost technologies and procedures are becoming widely accepted for helping institutional money managers and hedge funds to comply with reforms to increase the transparency, documentation, and justification of “soft dollars”. Soft dollars are commissions that money managers pay to brokerage firms above and beyond actual trading execution costs.

Design/methodology/approach

The article examines two such technologies by surveying different offerings and reviewing in detail market‐leading systems. The first technology examined is trade‐idea communication and management systems, which capture and analyze quantitative information about equity‐trade ideas. The second technology is broker review systems, which capture and analyze qualitative information on proprietary brokerage and research services. Both trade ideas and proprietary brokerage services are paid for through soft dollars and generate approximately 50 percent of an estimated $18 billion in annual brokerage commissions for Wall Street.

Findings

There are three primary reasons why these technologies and procedures cost much less than those used to enforce Sarbanes‐Oxley. Technologically, they have features that keep costs low, encourage use, facilitate customization and leverage existing data. Operationally, they automate practices already in place, capturing lost value and generating important management information. From a regulatory point of view, they do not require the documentation and testing of controls in advance, as Sarbanes‐Oxley does – procedures that can only be defensively accomplished by outside auditors and attorneys. Instead, money managers are being asked to capture and evaluate management information, which, in turn, they are using to increase productivity.

Originality/value

Rather than avoiding soft dollars for fear of the regulatory overhead, or developing complicated and expensive legalistic procedures, institutional money managers and hedge funds are using relatively low cost technology to enforce “soft dollar” compliance. At the same time, they are generating valuable management information that is helping them to become more productive.

Details

Journal of Investment Compliance, vol. 6 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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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 “sellside

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 “sellside 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 sellside 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

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Article
Publication date: 10 April 2007

Jeaneth Johansson

The purpose of this paper is to increase the transparency of the value‐creation chain in the stock market. It aims to: conceptualize the value‐added through the relational…

Abstract

Purpose

The purpose of this paper is to increase the transparency of the value‐creation chain in the stock market. It aims to: conceptualize the value‐added through the relational capital, inductively develop models on how values are created, and discuss the values created for the analyst firm, the clients and investors in the stock market in general.

Design/methodology/approach

The paper is based on a case study of sellside analysts at a big Swedish investment bank and their work with real life situations of changes in recommendations.

Findings

The findings of the case study indicate that analysts, through their relational capital, access competitive advantages needed for remaining on a highly competitive market. They get access to value‐added information and knowledge and also business for the firm. This helps them to fulfill the three roles played, i.e. as information intermediaries, knowledge builders and businessmen. However, the analysts' dependencies, due to their relational capital and the analysts' conflicting roles, result in ambiguous or even biased information. The values added to clients differ between prioritized clients who receive value‐added information through the relational capital with the analysts and non‐prioritized clients with limited, or no access, to the analysts' services.

Originality/value

Value created through relational capital within organizations has been intensively studied within the area of intellectual capital. However, the sellside analysts' value‐creation chain linked to their relational capital with company representatives and clients, considered in the present study, has been neglected.

Details

Journal of Human Resource Costing & Accounting, vol. 11 no. 1
Type: Research Article
ISSN: 1401-338X

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Article
Publication date: 25 December 2020

Veena Madaan and Monica Shrivastava

This paper investigates herding behavior and its persistence among foreign institutional investors (FIIs) in the individual stocks of the energy sector of Indian stock…

Abstract

Purpose

This paper investigates herding behavior and its persistence among foreign institutional investors (FIIs) in the individual stocks of the energy sector of Indian stock exchange by focusing on post turmoil period. The study also examines the relation of herding with the individual return, market return, trading volume and conditional volatility of individual and market return.

Design/methodology/approach

The presence of herding is investigated by Lakonishok et al. (1992) model, value-based and count-based herd ratio measure among FIIs in individual stock of energy sector post turmoil period. Further, run test was employed to check the persistency in herding and multivariate distributed lag to investigate the relationship with the market determinant.

Findings

The result indicates the existence of herding in most of the companies and strong persistence in all the companies. The intensity of buy side herding is higher than sell side. Herding and individual return both are significant driving forces of FIIs herding, while trading volume and market volatility in few companies exhibit inverse relationship.

Research limitations/implications

This study is limited to investigation of energy sector stock.

Social implications

Stock market is significantly influenced by FIIs and their propensity to herd may generate instability in the stock market. Therefore, regulatory authority should continuously monitor the flow of fund by FIIs.

Originality/value

Herding in the individual stock of the energy sector was not previously performed.

Details

South Asian Journal of Business Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2398-628X

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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…

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

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Article
Publication date: 3 June 2014

C.K.M. Lee, Danping Lin and Rohan Pasari

The purpose of this paper is to formulate procurement strategies and determine the optimal procurement quantity in order to maximize profit through forward contracting and…

Abstract

Purpose

The purpose of this paper is to formulate procurement strategies and determine the optimal procurement quantity in order to maximize profit through forward contracting and the spot market.

Design/methodology/approach

The procurement process is modeled at various stages along a time horizon from the perspective of the buyer, with consideration of uncertain yields, stochastic demand and dynamic spot market prices. Monte Carlo simulation based experiments were conducted to figure out the best procurement quantity for five different scenarios. The framework was developed to understand the impact of different uncertain variables on a firm's profit. A case study was carried out in a steel making company in India, with real data.

Findings

The results indicate that the proposed approach enables buyers to achieve higher profits under volatile demand conditions. In the case study, it was found that the profit is higher for the spot market than for contract pricing if there is significant demand and spot price volatility.

Originality/value

This research considers not only demand uncertainty but also supply uncertainty in the procurement process, and profit analysis was carried out to enable an enterprise to set up a procurement plan by using forward contracting and the spot market. This study should also increase awareness in both academia and industry on the opportunities of using the spot market to enhance flexibility and to mitigate risk in the procurement process.

Details

Industrial Management & Data Systems, vol. 114 no. 5
Type: Research Article
ISSN: 0263-5577

Keywords

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Article
Publication date: 12 April 2011

Craig A. Depken, Harris Hollans and Steve Swidler

This paper aims to examine the anatomy of a real estate bubble. In the process, the paper identifies three phases of the market's evolution: flips, flops and foreclosures…

Abstract

Purpose

This paper aims to examine the anatomy of a real estate bubble. In the process, the paper identifies three phases of the market's evolution: flips, flops and foreclosures. An examination of the Las Vegas real estate market illustrates the three phases.

Design/methodology/approach

The paper examines transaction data from the metropolitan Las Vegas area (Clark County) from 1994 to 2009. The first part of the analysis identifies the three phases of the bubble and is descriptive in nature. This is followed by more formal tests of Granger causality.

Findings

In the early part of the sample, a large percentage of transactions are speculative or “flips” causing prices to rapidly increase. Eventually, flipping loses its profitability and over the last three years, there is an increasing number of foreclosures leading to falling prices. The descriptive analysis of the Las Vegas market is augmented with causality tests which show that prices were the driving force behind all three phases in the market's evolution.

Research limitations/implications

Future research might focus on underlying structural inter‐temporal relationships to augment the Granger causality tests.

Practical implications

Analysis shows that price is the driving force behind a bubble and that loan modification programs alone will not solve the current housing crisis.

Social implications

Government entities might expand neighborhood stabilization programs to affect both demand and supply of homes. Moreover, it might be prudent to include information related to flipping on multiple listing service agreements. Additionally, local governments should be consistent in their record keeping.

Originality/value

To the best of the authors' knowledge, this is the first paper to examine the housing bubble using an extensive set of transaction data.

Details

Journal of Financial Economic Policy, vol. 3 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

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