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Title: Transnational equity analysis : evidence from UK investment analysts and institutional investors
Author: Clatworthy, Mark Anthony.
ISNI:       0000 0001 2420 7514
Awarding Body: Cardiff University
Current Institution: Cardiff University
Date of Award: 2002
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This thesis responds to calls for research into transnational investment decisionmaking by institutional investors and investment analysts. This issue has assumed a growing significanceo ver recent decadesd ue to the internationalisationa nd institutionalisationo f equity markets. Transnationald ecision-makingp rocessesa re also of import to the debate on the harmonization of international accounting. Using a questionnaires urvey and semi-structuredin terviews, the thesis investigates three related issues. First, it examines and compares the analysis techniques used by UK analystsa nd fund managersin analysingd omestica nd oversease quities. Second, it investigatesth e sourcesu sedb y fund managersa nd investmenta nalystst o inform domestic and transnational equity decisions, placing particular emphasis on accounting information and direct company contact. Finally, the research examines the attitude of the investment community to the international harmonization of accounting. In particular, it assessews hether fund managers'a nd investment analysts' decisions are affected by international accounting differences and gauges the views of these important users of accounting information on the harmonization process. The main findings are that fundamental analysis is the predominant appraisal technique in domestic and transnational equity analysis, irrespective of the country of domicile of the company being analysed. However, in order to facilitate international accountingc omparisons,a nalystsa nd fund managersu se ratios and measuresw hich are largely unaffected by international accounting differences when analysing overseasc ompanies. In particular, earningsb efore interest,t ax, depreciationa nd amortisation (EBITDA) is perceived as useful for cross-border comparisons. In respect of the information sources used to analyse overseas companies, direct company contact and the annual report remain the most influential overall. The financial statementsa rc clearly the most heavily utilised componentso f the annual report, yet there is some evidence that qualitative information in the annual report is more useful in overseasc ompanya nalysis. UK fund managersa lso rely on locallybaseda nalystsi n overseasc ompanya nalysisi n order to overcomep ossible information asymmetriesa nd for assistancew ith internationala ccountingd ifferences. However,f und managerse xpressedc oncerno ver analysts' independenced ue to analysts'r eluctancet o j eopardiseth eir relationshipw ith companym anagement. Although international accounting differences are not perceived to have a material effect on transnational investment decisions, the findings demonstrate substantial support from the financial community for harmonization. Indeed, analysts' and fund managersd' ecisionsa re themselvesa market-basedfo rce for harmonization,a s companiesu sing opaquea nd 'unfamiliar' accountings tandardsa re penalisedt hrough higher capital costs imposed to allow for additional accounting risk.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available