Financial Analysis Essay - 1238 Words

Is the Industry’s Analyst Research Useful for Investment Decisions? The primary role of the research analysts is to study the publicly traded companies and pass recommendations based on their financial securities, future growth potentials, and profit generation potentials. These recommendations influence economic activities in the contemporary industries. For instance, such recommendations can affect stock prices, especially if they are broadcasted to a large population. People’s decisions to purchase a company’s stocks depend on the information that the research analysts provide regarding its securities and potentials. Renowned analysts can facilitate the rise or fall of stock prices of a given company just by a mere mention of its†¦show more content†¦Biases tend to misinform the decisions taken by investors in any industry, thus leading to a mass loss of financial resources. For instance, most financial analysts tend to link the 2000 - 2001 stock market downturn to biased analysts research (Guan, Wu Long, 2012). The stock m arket downturn led to substantial investor losses during the same period (Guan et al., 2012). Since then, the major players in the business community such as the investors and regulators have remained skeptic about the roles of research analysts. Specifically, they have suspected that research analysts tend to advance bases to gain investment banking from the companies that command their interests (Guan et al., 2012). These trends prompted the regulatory commission to adopt a set of ethical guidelines in 2000 to improve the roles of research analysts and restore the confidence of investors. Several regulatory policies followed in 2003. One of the notable implementation of these reforms occurred in 2003 when the SEC imposed enforced policies on the prominent investment banks in the United States (Guan et al., 2012). These changes aimed the investment research industry, especially the compensation of the research analysts and the structure of the related operations. However, investors are still skeptic regarding the credibility of the processes amidst the enforced reforms. The investment banking businesses incentives are just one of theShow MoreRelatedFinancial Analysis Essay764 Words   |  4 Pageshowever, Poland, Switzerland, Netherlands, Scandinavia, Italy and Hungary were offset by turn down otherwise it would have been increased more by  £119 million or 16% whereas, the volumes rose 6% to 130 billion. Profit in Eastern Europe has fallen by  £59 million to  £409 million due to lower volumes by 4% than previous year. Russia, Uzbekistan, Ukraine and Romania were mainly had lower performance. 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