Question Essay on characteristics of analysts’ research reports and factors affecting them. Further details Assignment Context: Sell-side financial analysts occupy the centre court in the market for information and investment research. They are often regarded as the ‘brains’ and the ‘voice’ of the stock market. The research that they generate and disseminate helps institutional and individual investors to make more informed investment decisions. Therefore, their research is essential for maintaining market efficiency. However, it has been widely documented in the literature that analysts’ practice and various characteristics of their research (such as, the accuracy, objectivity and usefulness of their forecasts and recommendations, analysts’ herding, etc.), can be influenced by several factors. Among those factors are:
(i) analysts’ individual characteristics,
(ii) characteristics of analysts’ work/information environment that can give rise to conflicts of interest and influence analysts’ incentives, and
(iii) company-specific factors. Required:
By engaging with relevant academic literature, prepare an essay where you:
1.Identify and outline factors/characteristics of analysts’ work/information environment that have been shown to give rise to analysts’ conflict of interest, AND
2.critically discuss how these factors can influence:
(A)the accuracy / bias of analysts’ earnings forecasts, price targets and investment recommendations, OR
(B)the usefulness to investors (or the value relevance of) analysts’ earnings forecasts, price targets and recommendations. In your essay, you should choose and critically discuss only one of the above aspects, i.e., either
(2A) or (2B), but not both. Please clearly state in your essay whether you are discussing (2A) or (2B). Use of literature: While the papers and documents included in the reading list for Units 1 of the course are highly relevant for this essay topic and can be used in the essay, students are expected to go beyond this list of papers and carry out their own independent search for, and analysis of, relevant academic papers. You should aim to cite at least eight relevant academic papers. Students may also use and cite any relevant non-academic documents published by regulatory/professional bodies.