An Analysis of the Level of Qualitative Efficiency for the Equity Research Reports in the Italian Financial Market

Abstract

Corporate reports issued by various financial intermediaries play a major role in investment decisions. For this reason, it is particularly interesting to understand the accuracy of the forecasts, by carrying out an empirical analysis of the "equity research" system in Italy, identifying structural features, degree of reliability and incidence in the market. The choice of the analysis of the efficiency level information on the Italian market proposes to assess the interest of equity research of a niche market (339 listed companies in 2017) but with characteristics of potential growth such as having been acquired by LSEGroup in 2007, the 6th stock-exchange group at international level for the number of listed companies and the 4th for capitalization.
The analysis was carried out on the reports issued on companies belonging to the Ftse Mib stock index during a period of 5 years.
It aims to analyse the composition of the equity research system in Italy as well as the analysts' ability to properly evaluate the stocks' fair price, so as to test their degree of reliability and detect possible anomalies in recommendations to the investors.