DOCSLIB.ORG

The Capital Markets Industry the Times They Are A-Changin’

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Capital Markets Industry the Times They Are A-Changin’ THE CAPITAL MARKETS INDUSTRY THE TIMES THEY ARE A-CHANGIN’ EXECUTIVE SUMMARY The past five years have seen unprecedented The success of market participants will depend change in global capital markets. Buy-side on how well they position themselves to and sell-side participants, custodians, market respond to these challenges. They will need infrastructure and financial technology to retain the flexibility to deal with ongoing providers have all had to reassess their uncertainty but also identify their role in strategies, business models and risk the medium-term. In this paper, we pose frameworks. Today we find ourselves at a three questions. critical juncture. A new structure for the capital markets industry is emerging, however a great Addressing these questions will be critical for deal of uncertainty remains. all capital markets participants. 1. Where will opportunities be created Regulation continues to drive much of and lost? the change. The move towards greater transparency, less leverage and improved 2. What risks are emerging? governance is broadly welcomed across the 3. Who is positioned to meet the industry’s industry. However, while some regulations wide-ranging needs in 2020 and beyond? have been chewed and digested, in many places policy and regulatory requirements are still moving targets. Where will opportunities be created and lost? On top of regulation, shifting investor demands, rapid evolution in and increased Market and regulatory forces are reshaping dependence on technology, emergence of new the industry. Economic pressure, constrained risks and ever more interconnectedness are financial resources, greater scrutiny of all substantially affecting the capital markets conduct and conflicts, evolving client needs, value chain. The result is movement in revenue and technological innovation are evident in pools, where risk resides, and which actors are virtually all parts of the market. While these best placed to succeed. forces are individually familiar to market participants, their confluence is leading to All participants are being forced to adapt their rapid changes in where revenue is generated business models as a result. Some traditional across the capital markets value chain. service models will be usurped by alternatives in parts of the new capital markets ecosystem. Changes are occurring via three mechanisms: New and existing providers will compete demand for new products and services in battlegrounds for new services such as generating new revenue; shifts of existing collateral management. The economics revenue-generating activities between of established businesses may change participants; and cost reduction efforts drastically in some areas of the value chain, creating revenue for providers of insourced and there will be a disproportionate impact on solutions. These are playing out at all stages of certain players. the value chain. Copyright © 2014 Oliver Wyman 1 The effect on execution is bifurcated between the form of customized client reporting, liquid and illiquid instruments. For the former, provision of standardized back office there is a heavy focus on price transparency services, asset optimization and potential in and conduct. Scrutiny on commissions is emerging markets. leading to unbundling of brokerage costs from other services such as research. Additionally, Underpinning all of these trends will be wider concerns on conflicts in the determination of and more sophisticated re-use of data covering indices and price benchmarks have already both instruments and transactions. Mining resulted in sales of some of these businesses. of this data can increasingly be monetized For illiquid instruments, burdensome capital through data enrichment, lead generation and funding requirements are the greatest and optimization of other processes such as challenge as returns deteriorate for both collateral management. dealers and investors. This is leading to a “futurization” through substitution into listed instruments or movement of sufficiently What risks are emerging? standardized instruments onto organized As the value chain and the role of market execution venues. There is debate on the participants within it changes, so will risk ownership and operation of such venues and levels across the capital markets ecosystem. their implications for reference prices. We also Some financial risk will migrate from the anticipate growth in agency models as market- execution layer and the sell-side to post-trade makers withdraw capacity. market infrastructure, particularly CCPs, Centrally cleared volumes will grow global custodians and ICSDs. Across the significantly as a result of regulatory mandates industry, operational risk will grow as a result and punitive initial margin requirements of increased flow and interconnectedness, on un-cleared OTC derivatives. Clients will with near-term peaks as participants undergo increasingly interact more directly with CCPs, a period of operational, regulatory and especially where their interests are divergent technological adjustments. with their clearing brokers’ interests. On one hand, this offers the sell-side the We expect initial margin requirements to have opportunity to reduce and optimize their risk, grown by >$1 TN by 2018, making collateral leveraging infrastructure solutions (e.g. OTC management increasingly important. To meet CCPs and tri- and quad-party solutions for OTC this growing demand for collateral, solutions and securities financing), mitigating in part the will be required to unlock dormant eligible Basel III impact. instruments held by institutional investors. Additionally, demand for tri-party repo will On the other hand, market infrastructure increase as withdrawal of bilateral repo providers are now facing a new set of risks. capacity due to the leverage ratio and NSFR Some, mainly operational, are unfamiliar threatens participants’ ability to access cash and driven by interconnectedness and for margin. Perhaps the greatest challenge will technological advancement. Others, typically be ensuring operational robustness as volumes financial, are familiar but now of previously of circulating collateral increase, prompting a unknown magnitude and origin (e.g. in OTC greater focus on standards. clearing and lending). These changes should drive large investments in risk management Core custody and settlement services and compliance (e.g. risk appetite statements, are moving ever closer to a utility model, control frameworks, monitoring systems, lines driven by a combination of price pressure of defense, risk culture and governance) to and regulatory standards. However, new reflect increased breadth of focus and greater revenue opportunities will emerge in scrutiny of non-operational risks. Copyright © 2014 Oliver Wyman 2 The concentration of risk in the industry is We expect that traditional sell-side revenues changing too, and arguably growing. A number will be eroded as execution is commoditized, of institutions are becoming systemically though this will be offset with benefits arising important as “nodes” processing a significant from greater use of market infrastructure proportion of flow across multiple venues, providers. Proactive use of execution venues, for example collateral hubs. Simultaneously, CCPs, and other, e.g. non-cleared exposure interconnectedness is increasing, for example and collateral management solutions will through (planned) open access to CCPs, which reduce risk and leverage. Focusing on smart has implications for the risk of contagion use of 3rd party software and technology will should one of these systemic nodes fail. significantly reduce costs, as will outsourcing of standardized back office functions. Overall, Regulatory changes are already underway this should offer the sell-side the opportunity to respond to these new and growing risks. to trim operating, funding and capital costs, Capital levels are being increased and ultimately protecting returns. leverage reduced, but this can never be the whole answer. No metric can fully replace The role of market infrastructure providers sound judgment in risk management. Banks will grow throughout the value chain; are in the midst of creating recovery & those that can best serve the risk and cost resolution planning covenants (e.g. living wills) mitigation needs of the industry will prevail. although these are proving to be a thorny In the execution layer, operation of effective implementation issue. matching venues and building solutions for new asset classes (e.g. credit) will increasingly Market infrastructure and custodian risk fall to market infrastructure providers. frameworks and recovery & resolution Exchanges will become open access networks frameworks are less well developed, yet and support execution venue selection, more important than ever to cementing including taking a role in hosting of 3rd party the new capital markets industry structure. platforms. Collateral management will be International consistency in the treatment driven by a combination of CCPs and of these globally important institutions (I)CSDs, operating on a pan-regional scale, (lacking in many areas) will also be critical. the former optimizing margin amounts and supporting bilaterally margined trades, while the latter focusing on efficient identification Who is positioned to meet the and allocation of collateral. This will be driven by a collective push for open access to CCPs industry’s wide-ranging needs and improved collateral standards, with in 2020 and beyond? success of individual (I)CSDs
Load more

Recommended publications
  • Understanding Private Equity in the Healthcare Market June 2019 Table of Contents
    UNDERSTANDING PRIVATE EQUITY IN THE HEALTHCARE MARKET JUNE 2019 TABLE OF CONTENTS SECTION PAGE I. BCA Introduction 1 II. Healthcare Market Dynamics 8 III. What is Private Equity? 13 IV. What is a Recapitalization? 17 V. Appendix 20 I. BCA INTRODUCTION BCA IS ONE OF THE LARGEST HEALTHCARE BOUTIQUE INVESTMENT BANKS KEY FACTS 19 $6.4 billion 1 PARTNER-OWNED Total Investment Bankers Total Transaction Value 90% 10.9x 2 RELATIONSHIP-DRIVEN Closure Rate Avg. EBITDA Mult. For Healthcare Services Deals Closed in 2018 3 HEALTHCARE-FOCUSED 100 $85 million Total Transactions Closed Average Transaction Size 4 RESULTS-ORIENTED RELEVANT HEALTHCARE SERVICES TRANSACTIONS Recapitalization Sell-Side Recapitalization Recapitalization Recapitalization RecapitalizationSell-Side Recapitalization Recapitalization Recapitalization Recapitalization Recapitalization Recapitalization Recapitalization Recapitalization Led By Led By Led By Sell-Side Advisory Recapitalization Recapitalization Sell-Side Advisory Led by Led by Led by Led By to Led by Led By to UnitrancheRecapitalization Debt RecapitalizationGrowth Equity RecapitalizationSell-Side Buy Side Recapitalization Sell-Side Recapitalization Recapitalization Recapitalization Recapitalization Acquired Recapitalization Debt-Private placement Equity Investment Sell-Side Advisory Recapitalization Led By Led By Led By Sell-Side Advisory Led by Led by Led By to Led by to $113,000,000 1 OUR HEALTHCARE INVESTMENT BANKING TEAM EXTENSIVE INDUSTRY KNOWLEDGE & EXPERIENCED INVESTMENT BANKERS 2 3 DEEP BENCH 1 TRANSACTION EXPERIENCE
    [Show full text]
  • Capital Markets
    U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Capital Markets OCTOBER 2017 U.S. DEPARTMENT OF THE TREASURY A Financial System That Creates Economic Opportunities Capital Markets Report to President Donald J. Trump Executive Order 13772 on Core Principles for Regulating the United States Financial System Steven T. Mnuchin Secretary Craig S. Phillips Counselor to the Secretary Staff Acknowledgments Secretary Mnuchin and Counselor Phillips would like to thank Treasury staff members for their contributions to this report. The staff’s work on the report was led by Brian Smith and Amyn Moolji, and included contributions from Chloe Cabot, John Dolan, Rebekah Goshorn, Alexander Jackson, W. Moses Kim, John McGrail, Mark Nelson, Peter Nickoloff, Bill Pelton, Fred Pietrangeli, Frank Ragusa, Jessica Renier, Lori Santamorena, Christopher Siderys, James Sonne, Nicholas Steele, Mark Uyeda, and Darren Vieira. iii A Financial System That Creates Economic Opportunities • Capital Markets Table of Contents Executive Summary 1 Introduction 3 Scope of This Report 3 Review of the Process for This Report 4 The U.S. Capital Markets 4 Summary of Issues and Recommendations 6 Capital Markets Overview 11 Introduction 13 Key Asset Classes 13 Key Regulators 18 Access to Capital 19 Overview and Regulatory Landscape 21 Issues and Recommendations 25 Equity Market Structure 47 Overview and Regulatory Landscape 49 Issues and Recommendations 59 The Treasury Market 69 Overview and Regulatory Landscape 71 Issues and Recommendations 79
    [Show full text]
  • A Current Guide to Direct Listings
    January 8, 2021 A CURRENT GUIDE TO DIRECT LISTINGS To Our Clients and Friends: Over the course of December 2019, Gibson Dunn published its “Current Guide to Direct Listings” and “An Interim Update on Direct Listing Rules” discussing, among other things, the direct listing as an evolving pathway to the public capital markets and the U.S. Securities and Exchange Commission’s (SEC) rejection of a proposal by the New York Stock Exchange (NYSE) to permit a privately held company to conduct a direct listing in connection with a primary offering, respectively. The NYSE continued to revise its proposal in consultation with the SEC and, on August 26, 2020, the SEC approved an amendment to the NYSE’s proposal that will permit primary offerings in connection with direct listings. The August 26 order, which would have become effective 30 days after being published in the Federal Register, was stayed by the SEC on September 1, 2020 in response to a notice from the Council of Institutional Investors (CII) that it intended to file a petition for the SEC to review the SEC’s approval. On December 22, 2020, the SEC issued its final approval of the NYSE’s proposed rules. Consequently, Gibson Dunn has updated and republished its Current Guide to Direct Listings to reflect today’s landscape, including an overview of certain issues to monitor as direct listing practice evolves included as Appendix I hereto. Direct Listings: An evolving pathway to the public capital markets. Direct listings have increasingly been gaining attention as a means for a private company to go public.
    [Show full text]
  • Impact of Sell-Side Reccomendation Reports on Stock Returns
    REVISTA EVIDENCIAÇÃO CONTÁBIL & FINANÇAS João Pessoa, v.5, n.3, p.22-36, set./dez. 2017. ISSN 2318-1001 DOI:10.18405/recfin20170302 Available on: http://periodicos.ufpb.br/ojs2/index.php/recfin IMPACT OF SELL-SIDE RECCOMENDATION REPORTS ON STOCK RETURNS Bruno Sun1 Bachelor of Administration by University of São Paulo (USP) [email protected] Liliam Sanchez Carrete PhD of Administration by University of São Paulo (USP) Teacher at University of São Paulo (USP) [email protected] Rosana Tavares PhD of Administration by University of São Paulo (USP) Teacher at University of São Paulo (USP) [email protected] ABSTRACT Objective: this research aims to investigate the impact of sell-side analysts’ reports on stock returns. Foundation: it is inserted in equity investment analysts research contextualized in the Market Efficiency Theory which defines that in efficient markets the market prices reflects all the relevant information of its intrinsic price. Method: this investigation is based on the event study methodology, which event date is the publication of the recommendation report. The abnormal return obtained for the event date and the cumulative abnormal return is obtained from the date of publication of the recommendation for 3 days, 1 week, 1 month, and 3 months. Results: results obtained were consistent in signal with the first hypothesis that abnormal return is positive for each one of the terms from the event date (1 day to 3 months) for recommendation of purchase and strong purchase. On the other hand, the abnormal return was all negative with statistical significance for sale recommendations in favor of the second hypothesis which comprises that the abnormal return is negative for each of the deadlines for the sell recommendations and strong sell.
    [Show full text]
  • How Do Institutional Investors Interact with Sell-Side Analysts?
    The Journal of Applied Business Research – May/June 2018 Volume 34, Number 3 How Do Institutional Investors Interact With Sell-Side Analysts? Grace Il Joo Kang, Singapore University of Social Sciences, Singapore Yong Keun Yoo, Korea University Business School, South Korea Seung Min Cha, Kyonggi University, South Korea ABSTRACT This paper examines how institutional investors interact with sell-side analysts (hereafter, SSAs) in Korean stock market. In particular, we examine the role of institutional investors as a more sophisticated mechanism which incorporates sell-side analysts’ stock recommendation, target price, and earnings forecast more rapidly than individual investors do. Moreover, we examine whether institutional investors differentiate the quality of sell-side analysts’ information. By using a sample of 1,421 firm-year observations in Korean stock market during 2001–2011, we find that the change of institutional investor’s ownership has a significantly positive association with the level of equity value estimates based on SSAs’ earnings forecasts relative to stock prices and their stock recommendation which are considered as SSAs’ indicator of stock market’s mispricing. In addition, we find that only when SSAs provide more accurate earnings forecasts, institutional investors incorporate SSA’s information into their stock trading. Thus, we conclude that institutional investors in Korean stock market contribute to the enhancement of stock market efficiency by incorporating SSAs’ information into their stock trading more rapidly than individual investors. Our findings add to the literature by shedding a light on the unobserved interaction among more sophisticated stock market participants, such as institutional investors and sell-side analysts. Keywords: Sell-Side Analyst; Institutional Ownership; Analysts’ Earnings Forecasts; Target Prices; Stock Recommendations I.
    [Show full text]
  • ENHANCED SCRUTINY on the BUY-SIDE Afra Afsharipour and J
    ENHANCED SCRUTINY ON THE BUY-SIDE Afra Afsharipour and J. Travis Laster** Empirical studies of acquisitions consistently find that public company bidders often overpay for targets, imposing significant losses on bidder shareholders. Numerous studies have connected bidder overpayment with managerial agency costs and behavioral biases that reflect management self-interest. For purposes of corporate law, these concerns implicate the behavior of fiduciaries—the officers and directors of the acquiring entity—and raise questions about whether those fiduciaries are fulfilling their duty of loyalty. To address comparable sell-side concerns, the Delaware courts developed an intermediate standard of review known as enhanced scrutiny. There has been little exploration, however, of whether the rationales for applying enhanced scrutiny to the actions of sell-side fiduciaries extend to comparable fiduciaries on the buy-side. This Article addresses this long-neglected question. Drawing upon the history of Delaware jurisprudence on enhanced scrutiny, it argues that enhanced scrutiny should extend to the decisions of buy-side fiduciaries. The Article also recognizes that, although doctrinally coherent, applying enhanced scrutiny to buy-side decisions would open the door to well-documented stockholder litigation pathologies that have undermined the effectiveness of enhanced scrutiny for sell-side decisions. To address these pathologies, the Delaware * Senior Associate Dean for Academic Affairs, Professor of Law & Martin Luther King, Jr. Hall Research Scholar, University of California, Davis School of Law. ** Vice Chancellor, Delaware Court of Chancery. For helpful comments and conversations, we thank the participants in the Fifth Annual Corporate and Securities Workshop (2017) held at UCLA School of Law, the Tulane Corporate and Securities Law Conference (2018), the Utah Law School Faculty Workshop (2018), and Jill Fisch, Cathy Hwang, Tom Joo, Therese Maynard, Steven Davidoff Solomon, Diego Valderrama and Urska Velikonja.
    [Show full text]
  • FT PARTNERS RESEARCH 2 Fintech Meets Alternative Investments
    FT PARTNERS FINTECH INDUSTRY RESEARCH Alternative Investments FinTech Meets Alternative Investments Innovation in a Burgeoning Asset Class March 2020 DRAFT ©2020 FinTech Meets Alternative Investments Alternative Investments FT Partners | Focused Exclusively on FinTech FT Partners’ Advisory Capabilities FT Partners’ FinTech Industry Research Private Capital Debt & Raising Equity Sell-Side / In-Depth Industry Capital Buy-Side Markets M&A Research Reports Advisory Capital Strategic Structuring / Consortium Efficiency Proprietary FinTech Building Advisory FT Services FINTECH Infographics Partners RESEARCH & Board of INSIGHTS Anti-Raid Advisory Directors / Advisory / Monthly FinTech Special Shareholder Committee Rights Plans Market Analysis Advisory Sell-Side Valuations / LBO Fairness FinTech M&A / Financing Advisory Opinion for M&A Restructuring Transaction Profiles and Divestitures Named Silicon Valley’s #1 FinTech Banker Ranked #1 Most Influential Person in all of Numerous Awards for Transaction (2016) and ranked #2 Overall by The FinTech in Institutional Investors “FinTech Excellence including Information Finance 40” “Deal of the Decade” • Financial Technology Partners ("FT Partners") was founded in 2001 and is the only investment banking firm focused exclusively on FinTech • FT Partners regularly publishes research highlighting the most important transactions, trends and insights impacting the global Financial Technology landscape. Our unique insight into FinTech is a direct result of executing hundreds of transactions in the sector combined with over 18 years of exclusive focus on Financial Technology FT PARTNERS RESEARCH 2 FinTech Meets Alternative Investments I. Executive Summary 5 II. Industry Overview and The Rise of Alternative Investments 8 i. An Introduction to Alternative Investments 9 ii. Trends Within the Alternative Investment Industry 23 III. Executive Interviews 53 IV.
    [Show full text]
  • Deal Advisory / Global
    Protect what is valuable Deal Advisory / Global We can help you achieve successful Sell Side transactions. Supporting growth through active portfolio management and successful divestments. Throughout this document, “KPMG” [“we,” “our,” and “us”] refers to KPMG International, a Swiss entity that serves as a coordinating entity for a network of independent member firms operating under the KPMG name, and/or to any one or more of such firms, and/or to KPMG Deal Advisory professionals working in KPMG member firms around the globe. KPMG International provides no client services. / 1 Your vision. Our proven Learn more about the six critical stages of capabilities. a divestiture and how we can help deliver portfolio value throughout the lifecycle. When it comes to selling a business, every decision counts. Our integrated team of specialists helps you make the right decisions throughout the sales process, combining Integrated services across deep sector knowledge and the foresight that the transaction lifecycle comes from experience. 1Portfolio Strategy 2Exit Options 3Prepare for Exit We take a practical 4 Deal Execution 5Pre-Close approach to 6Post-Close enhancing value. This document reflects a wide range of services and does not differentiate between those services that are permissible or not permissible for KPMG audit clients and their affiliates. Real results achieved by In addition, certain software and technology services, joining integrated specialists. with third parties in service delivery, are also subject to potential independence restrictions based upon the facts and Securing the best value for a divestiture is a circumstances presented in each situation. complex process that involves gaining a more objective view of your company and a more nuanced understanding of current market conditions, as well as divining the agendas of the buyers seated across from you.
    [Show full text]
  • Sell-Side M&A – Divestitures, Trade-Sales and Mergers
    White Paper #6: Sell-Side M&A – Divestitures, Trade-sales and Mergers © Copyright 2017 Remis AS / Ketil Wig Versjon 2.1 – Oct. 2017 While buy-side M&A processes (acquisitions) are focused on alignment of strategy, integration and risk management; the sell- side M&A (divestitures and trade-sales) skill set is concentrated around negotiations and tactics. Sell-side M&A is different! Sell-side and buy-side M&A are obviously different, but this difference goes deeper than most managers realize. For acquisition processes (see White Paper #5 on Buy-side M&A), strategy alignment, post- merger integrations, approach tactics and risk management are keys to success: For divestitures and trade sales the strategic themes are secondary (although by no means irrelevant), and negotiations and tactical skills are primary success factors. While the negotiation strength of the buyers in an acquisition process is influenced by such factors as alternative acquisition targets and their Illustration #1: A model for preconditions, strategic drivers, criteria and decision levels of an M&A divestiture process options for delivering growth (including e.g. organic growth, strategic alliances etc.), it is the seller in a sell-side transaction who to a large extent defines the landscape of negotiation - and the primary tool is the The role of strategy in divestitures and trade number of qualified buyers. sales For divestitures and When the decision to divest a business has been made, the obvious trade sales the The strategic drivers when executing a sell-side transaction (excluding objective of the seller is to maximize price and terms.
    [Show full text]
  • What Drives Sell-Side Analyst Compensation at High-Status Investment Banks?
    WHAT DRIVES SELL-SIDE ANALYST COMPENSATION AT HIGH-STATUS INVESTMENT BANKS? * ** Boris Groysberg Paul M. Healy Harvard Business School Harvard Business School David A. Maber*** USC Marshall School of Business This Draft: December 20, 2010 This research was funded by the Division of Research at Harvard Business School and the USC Marshall School of Business. We wish to thank I/B/E/S for analyst data and, especially, the anonymous financial services firms that provided us with their financial analysts’ compensation data. We also wish to thank Alok Kumar, Douglas Emery, and Xi Li, who generously supplied their Institutional Investor and WSJ star analyst data, Mike Cliff, who kindly supplied his I/B/E/S-SDC link table, and Malcolm Baker and Jeffrey Wurgler for their market sentiment data. Helpful comments were provided by Mark Bagnoli, Jasmijn Bol, Sarah Bonner, Folkert Botma, Jan Bouwens, Mihir Desai, Pat O’Brien, Fabrizio Ferri, Lee Fleming, Joseph Gerakos, Cam Harvey, Kai Li, Kevin J. Murphy, Steve Orpurt, Eddie Riedl, Jenny Tucker, Susan Watts, Michael Welker, and seminar participants at the 2008 Ball & Brown Tribute Conference at the University of New South Wales, 2008 CAAA Doctoral Consortium and 2009 CAAA Annual Meeting, 19th Annual Conference on Financial Economics and Accounting at the University of Texas at Austin, 2008 Financial Management Annual Meeting, 2008 London Business School Trans-Atlantic Doctoral Conference, 2008 Washington Area Finance Conference, 2009 FARS mid-year conference in New Orleans, Boston University, Cornell, HBS, HKUST, Purdue, Singapore Management University, Tilburg, UBC, UNC, USC, and the University of Technology, Sydney. The usual disclaimer applies.
    [Show full text]
  • A Comparison of Buy-Side and Sell-Side Analysts
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by The University of North Carolina at Greensboro Archived version from NCDOCKS Institutional Repository http://libres.uncg.edu/ir/asu/ A Comparison Of Buy-Side And Sell-Side Analysts By: Jeffrey Hobbs and Vivek Singh Abstract There is very little research on the topic of buy-side analyst performance, and that which does exist yields mixed results. We use a large sample from both the buy-side and the sell-side and report several new results. First, while the contemporaneous returns to portfolios based on sell-side recommendations are positive, the returns for buy- side analysts, proxied by changes in institutional holdings, are negative. Second, the buy-side analysts' underperformance is accentuated when they trade against sell-side analysts' recommendations. Third, abnormal returns positively relate to both the portfolio size and the portfolio turnover of buy-side analysts' institutions, suggesting that large institutions employ superior analysts and that superior analysts frequently change their recommendations. Abnormal returns are also positively related to buy-side portfolios with stocks that have higher analyst coverage, greater institutional holding, and lower earnings forecast dispersion. Fourth, there is substantial persistence in buy-side performance, but even the top decile performs poorly. These findings suggest that sell-side analysts still outperform buy-side analysts despite the severe conflicts of interest documented in the literature. Hobbs, J. and V. Singh (2015). "A comparison of buy-side and sell-side analysts." Review of Financial Economics 24: 42-51. https://doi.org/10.1016/j.rfe.2014.12.004.
    [Show full text]
  • Guide to Going Public Strategic Considerations Before, During and Post-IPO Contents
    Guide to going public Strategic considerations before, during and post-IPO Contents 1 | Guide to going public Foreword For private companies seeking to raise capital and capital-held companies considering their strategic options for funding for provide exits for their shareholders, an initial public growth, including a public listing. We have professionals with extensive, offering (IPO) can be a superior route and strategic proven experience with domestic and international capital markets. Our professionals have deep knowledge of your industry, which allows us to option to funding growth and to access deep pools of create interdisciplinary teams that will steer you onward, through and liquidity. While challenging markets will come and go, beyond your IPO and support your plans for growth. it’s the companies that are fully prepared that will We are confident this Guide to going public will give you an initial overview best be able to create value and fully leverage the and checklists of the key phases in going public from a global perspective. IPO windows of opportunity whenever they are open. It is based on EY insights from many IPO transactions, to help you begin Companies that have completed a your IPO value journey, so that you are well prepared to transform your successful IPO know the process private company into a successful public company that continually delivers The companies that involves the complete transformation value to its shareholders. With more than 30 years’ experience helping of the people, processes and culture companies prepare, grow and adapt to life as a public entity, we are well- are fully prepared will be of the organization from a private suited to take you on your IPO journey providing tailored support and enterprise to a public one.
    [Show full text]