Research Report

What Is a Research Report?

A research report is a document prepared by a analyst or strategist who is a part of the investment research team in a stock brokerage or investment bank. A research report might zero in on a specific stock or industry sector, a currency, commodity or fixed-income instrument, or on a geographic region or country. Research reports generally, however not dependably, have actionable recommendations, for example, investment ideas that investors can act upon.

Understanding Research Reports

Research reports are delivered by different sources, ranging from market research firms to in-house departments at large organizations. When applied to the investment industry, the term for the most part alludes to sell-side research, or investment research created by brokerage houses.

Such research is disseminated to the institutional and retail clients of the brokerage that produces it. Research delivered by the buy-side, which includes pension funds, mutual funds, and portfolio managers, is as a rule for internal utilize just and isn't distributed to outer parties.

Financial Analyst Research Reports

Financial analysts might deliver research reports to help a particular recommendation, for example, whether to buy or sell a particular security or whether a client ought to consider a particular financial product. For instance, an analyst might make a report concerning another offering being proposed by a company. The report could include significant metrics regarding the company itself, for example, the number of years they have been in operation as well as the names of key stakeholders, alongside statistics regarding the current state of the market where the company participates. Information regarding overall profitability and the intended utilization of the funds can likewise be included.

Research Report Impact

Devotees of the Efficient Market Hypothesis (EMH) could insist that the value of professional analysts' research reports is suspect and that investors probably place too much confidence in the ends such analysts make. While a definitive decision about this subject is hard to make since correlations are not exact, some research papers really do exist which claim empirical evidence supporting the value of such reports.

One such paper read up the market for India-based investments and analysts who cover them. The paper was distributed in the March 2014 release of the International Research Journal of Business and Management. Its creators presumed that analyst recommendations truly do have an impact and are beneficial to investors in short-term choices.

Irreconcilable situations

While certain analysts are practically unaffiliated, others might be straightforwardly or indirectly affiliated with the companies for which they produce reports. Unaffiliated analysts generally perform independent research to determine a fitting recommendation and may have a limited concern regarding the outcome.

Affiliated analysts might feel best served by ensuring any research reports depict clients in a positive light. Moreover, in the event that an analyst is likewise an investor in the company on which the report is based, he might have a personal incentive to stay away from points that might bring about a brought down valuation of the securities in which he has invested.