The Changing Market for Investment Research: The Impact of Innovations in the Payment Mechanism on Market Structure and Information Flows

Haig, Alistair; Rees, William

doi:10.2139/ssrn.2736820

Cited by 4 publications

(1 citation statement)

References 26 publications

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“…In the United Kingdom, the government-commissioned Myners Report 2001found evidence of short-termism and herding behavior in the fund management industry due to the vagueness about the timescales over which FMs' performance was measured and the "peer group" benchmark system. This report also revealed that broker commissions paid by these FMs were not rendered transparent to their clients and recommended that dealing commissions paid by BS firms to SS firms should not be used to pay for SS research (Haig and Rees 2016). Based on this recommendation, in 2006 the Financial Service Authority introduced "use of dealing commission rules" which encouraged the use of commission sharing arrangements and restricted nonexecution commissions to research only.…”

Section: Alternative Pathways To Understanding Analyst Workmentioning

confidence: 99%

Earning the “Write to Speak”: Sell‐Side Analysts and Their Struggle to Be Heard

Spence

Aleksanyan

Millo

et al. 2019

Contemporary Accting Res

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This paper explores the ways in which sell‐side (SS) financial analysts seek to position themselves advantageously within the wider field of investment advice in spite of widespread skepticism over the value that their forecasts and recommendations add to investment decisions. The field of investment advice has been characterized in recent years by a number of regulatory and technological changes that have forced SS analysts to reconstitute the ways in which they influence the investment decisions of buy‐side (BS) actors. Faced with existential threats, SS analysts have responded to the disruptive impact of technology and regulation by struggling hard to ensure that their services are still valued by fund managers. Key to this ongoing process is the recalibration of professional expertise, which previous research has alluded to but not explored in detail. Central to the persistence of SS analysts in processes of investment decision making are activities revolving around the production and use of analyst reports which, our findings indicate, are less valuable for their informational content than their role as “relational devices,” ascribing legitimacy to SS analysts and earning them an entry ticket to more substantive, value‐adding interactions with companies and BS actors. We also show that economic considerations in the area of investment advice are influenced by social ties, the motivations of various actors in the field, and their relative position vis‐à‐vis other actors. More generally, we contribute to the literature on professional projects by showing how professional groups are constantly engaged in attempts to reposition themselves in the social space, but that field‐level changes can restrict the outcomes of these strategies to mitigation rather than advancement for the professionals concerned.

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Section: Alternative Pathways To Understanding Analyst Workmentioning

confidence: 99%