Examining Investment Information Sources for Sophisticated Investors Using Cluster Analysis

Bence, David; Hapeshi, Kevin; Hussey, Roger

doi:10.1080/00014788.1995.9729496

Cited by 30 publications

(29 citation statements)

References 8 publications

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“…Hence, little is yet known and understood about the rationales and mechanisms of sell-side analysts' use of ICI in the process of company fundamental analysis, stock valuation and investment recommendation decision making, and factors influencing this usage. We focus on sell-side analysts because among the capital market actors, sell-side analysts are considered to be the most informed and sophisticated users of corporate information (Day, 1986, Schipper, 1991, Bence et al, 1995 who play a central role in providing investment and valuation advice to the market (Campbell and Slack, 2008). Other capital market participants such as fund managers and buy-side analysts rely on company research produced by sell-side analysts (Core, 2001, Fogarty and Rogers, 2005, Galanti, 2006 and are sometimes actively discouraged by their employers to go against sell-side analysts' advice when making portfolio selection decisions (Campbell and Slack, 2008).…”

Section: Introductionmentioning

confidence: 99%

The use of intellectual capital information by sell-side analysts in company valuation

Abhayawansa

Aleksanyan

Bahtsevanoglou

2015

Accounting and Business Research

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This paper investigates the role of intellectual capital information (ICI) in sell-side analysts' fundamental analysis and valuation of companies. Using in-depth semi-structured interviews it penetrates the black-box of analysts' valuation decision making by identifying and conceptualising the mechanisms and rationales by which ICI is integrated within their valuation decision processes.We find that capital market participants are not ambivalent to ICI, and ICI is used: (1) to form analysts' perceptions of the overall quality, strengths and future prospects of companies; (2) in deriving valuation model inputs; (3) in setting price targets and making investment recommendations; and (4) as an important and integral element in analyst-client communications. We show that: there is a 'pecking order' of mechanisms for incorporating ICI in valuations, based on quantifiability; IC valuation is grounded in valuation theory; there are designated entry points in the valuation process for ICI; and a number of factors affect analysts' ICI use in valuation. We also identify a need to redefine 'value-relevant' ICI to include non-price sensitive information; acknowledge the boundedness and contextuality of analysts' rationality and motives of their ICI use; and the important role of analyst-client meetings for ICI communication.

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Section: Introductionmentioning

confidence: 99%

The use of intellectual capital information by sell-side analysts in company valuation

Abhayawansa

Aleksanyan

Bahtsevanoglou

2015

Accounting and Business Research

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“…6 Prior research provides some evidence that the AC can take actions that may lead to improvements in financial reporting (e.g., Carcello & Neal, 2000Abbott et al, 2003). Similarly, survey studies (e.g., Bence et al, 1995;Barker, 1998) reveal that interim reports are considered important for investment decision-making by users. First, several studies document the favourable impact of interim reports on capital market participants.…”

Section: Introductionmentioning

confidence: 99%

“…Additionally, Cornell and Landsman (1989) show that analysts revise annual earnings forecasts at the release of interim reports, suggesting that the reports provide useful information. Similarly, survey studies (e.g., Bence et al, 1995;Barker, 1998) reveal that interim reports are considered important for investment decision-making by users. All things being equal, more and credible interim information is expected to be more valuable to stock market participants.…”

Section: Introductionmentioning

confidence: 99%

“…These studies examined the association between auditor involvement and companyspecific characteristics (e.g., company size, gearing, industry, etc.). Others (e.g., Bence et al, 1995;Barker, 1998) conduct surveys of users to determine if they find the reports useful. Han and Wang (1998) and Rangan (1998) also suggest that management may engage in interim earnings management as opposed to annual earnings management.…”

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confidence: 99%

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Audit Committees and Voluntary External Auditor Involvement in UK Interim Reporting

Mangena

Tauringana

2008

Int J Auditing

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The study investigates the relationship between audit committee characteristics and the decision to engage external auditors to review published interim reports. The motivation for the study derives from the consensus notion that the audit committee enhances the quality of financial reporting. Using interim reports of 258 UK listed companies published in the period 2001–2002, the results of logistic regression analyses show that the likelihood of engaging an external auditor to review interim reports increases with audit committee independence and financial expertise and decreases with share ownership by audit committee members. The results show that audit committee size and the number of audit committee meetings are not significantly associated with the decision to engage auditors in interim reporting. Taken overall, these findings suggest that an effective audit committee is associated with a review of interim reports by external auditors.

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“…Using cluster analysis, Bence et al (1995) also detected significant differences between fund managers and investment analysts, although accounting information was deemed important to both groups. The predominant cluster of information sources for investment analysts included preliminary statements, interim statements, annual reports, company presentations and personal interviews.…”

Section: Differences Between Analysts and Fund Managersmentioning

confidence: 96%

Swaps and Other Derivatives

Flavell¹

2012

Swaps and Other Derivatives

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Examining Investment Information Sources for Sophisticated Investors Using Cluster Analysis

Cited by 30 publications

References 8 publications

The use of intellectual capital information by sell-side analysts in company valuation

The use of intellectual capital information by sell-side analysts in company valuation

Audit Committees and Voluntary External Auditor Involvement in UK Interim Reporting

Swaps and Other Derivatives

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