Rather than relying on sell-side analysts, who do not buy or sell stocks and bonds, buy-side investors are bringing equity research in-house.
The reason for the change is due to widespread dissatisfaction with the quality of sell-side research, where quality issues are persisting, the report established.
The number of companies satisfied with the level of sell-side coverage has continued to plummet, reaching 58% in 2014.
In addition to complaints over quantiity, 37% of Investment Relations Officers (IROs) have noticed a further decline in the quality of sell-side research, down slightly from last year’s record high of 41%.
“As expected, the level of coverage remains directly proportionate to company size: only 15% of the smallest companies are happy with the level of coverage against 71% of the largest,” Sandra Novakov, a director at Citigate and author of the report, said.
As a consequence, buy-side research has been on the rise. Nearly half (42%) of the 190 investment relations officers asked in the survey said they had noticed an increase in internal buy-side research over the past 12 months.
In addition, the report also highlighted that regulation is more prominent on the list of challenges for 2014, driven mostly by the financials sector. Of the survey participants, 28% said that regulation was one of the top challenges ahead, compared to 22% last year.
However, this concern ranked 5th in the overall list of concerns. Number one was challenges relating to the economy, which 46% of participants listed as their main challenge ahead. This is somewhat down from 58% last year.
