Wall Street Research: Past, Present, and Future provides a timely account of the dramatic evolution of Wall Street research, examining its rise, fall, and reemergence. Despite regulatory, technological, and global forces that have transformed equity research in the last ten years, the industry has proven to be remarkably resilient and consistent. Boris Groysberg and Paul M. Healy get to the heart of Wall Street research—the analysts engaged in the process—and demonstrate how the analysts' roles have evolved, what drives their performance today, and how they stack up against their buy-side counterparts. The book unpacks key trends and describes how different firms have coped with shifting pressures. It concludes with an assessment of where equity research is headed in emerging markets, drawing conclusions about this often overlooked corner of Wall Street and the industry's future challenges.
About the authors
Boris Groysberg is Professor of Business Administration at Harvard Business School. He is author of the award-winning book Chasing Stars: The Myth of Talent and the Portability of Performance.
Paul Healy is Professor of Business Administration at Harvard Business School. He is co-author of one of the leading financial analysis textbooks, Business Analysis and Valuation, 5th Edition.
"The story of sell-side security analysis is still unfolding, but for an up-to-date account, this book serves the reader extremely well. The authors provide illuminating examples of recent innovations in the production and distribution of research and offer valuable insight by applying economic models in novel ways."
—Martin S. Fridson, CFA Institute
"The book will interest investors and individuals who use analysts' estimates and recommendations. Students considering career choices will also find this book useful since the authors cover an analyst's compensation and desired traits, such as work ethic, entrepreneurship, and ability to perceive risk . . . Recommended."
—H. Mayo, CHOICE
"Professors Groysberg and Healy are two of world's foremost authorities on Wall Street research. This book is a must read for anyone interested in the state of investment research and its future. It examines the industry with thorough academic research and interviews with industry insiders to provide important insights on the role of Wall Street research in capital markets."
—Barry Hurewitz, Managing Director and Chief Operating Officer, Morgan Stanley Investment Research
"Groysberg and Healy bring alive the full evolution of equity research throughout bull and bear markets over the past fifty years. Their analysis of key factors, such as independence of research and measurements of performance, give a blueprint for the future of equity research as an engine for generating investor value."
—Stefano Natella, Managing Director and Global Head of Research, Credit Suisse
"As a manager of buy-side analysts, this book is invaluable to my work. The buy-side is naturally opaque and issues related to compensation, team structure, and performance can be difficult to benchmark with competitors. We often ask ourselves how many stocks an analyst can reasonably cover and how to best leverage sell-side research. The findings in Wall Street Research provide important clues about how the industry can manage these questions. I have not seen anything like it."
—Guillermo R. Araoz, Former Director of Equities, Morgan Asset Management
"Groysberg and Healy are the preeminent chroniclers of Wall Street, having amassed an unsurpassed treasure trove of history and knowledge from their decades-long pursuit of the personalities, institutions, and regulations that have made the industry what it is today. Wall Street Research explores potential business models and platforms for the continuing evolution of sell-side research. The importance of independent research for our industry, for the economy and for individual investors, makes this a must-read."
—Jay C. Plourde, Executive Director, CLSA Americas
"Full of institutional details that deepen our understanding of sell-side research, this book provides penetrating insights into the role that financial analysts plays in stock markets."
—Patricia Dechow, UC Berkeley
"In one short volume, the authors provide a historic perspective on Wall Street research, while offering crisp and insightful views on topics that can seem intangible and amorphous, even to those who are steeped in the traditions of the business. The book is a valuable resource for experienced analysts, investors, brokers, and regulators; it is also a great read for those who are about to embark on a career in research, and for those of us who are getting ready to look back on one."
—Stephen J. Buell, Director of US Equity Research, Canaccord Genuity Inc.
"An important objective analysis that should be read by all who want to understand the role and value of analysts. It should be mandatory reading for researchers, journalists, and regulators who deal with these professionals."
—Trevor Harris, Columbia University and Former Managing Director and Vice Chairman, Morgan Stanley
"Wall Street Research: Past, Present, and Future provides the reader with an excellent historical perspective on sell-side research. Groysberg and Healy clearly describe the many challenges that research departments have faced over the years, and take an insightful look at what firms have done to overcome those obstacles. They do a fabulous job of painting the picture of an ever-evolving business model."
—Tom Maloney, Managing Director and Director of Research, Needham & Company
"As an analyst and research director for more than 30 years, I can say that the authors did an outstanding job of describing the analyst role and the increasingly difficult challenges presented by technology and regulatory change."
—Robert P. Anastasi, Senior Managing Director and Director of Equity Research, Raymond James & Associates
"A great read for people interested in the nitty gritty of sell-side research trends. I especially liked the analysis of the particular responses from the sell side to different realities in the ever changing economics of the business."
—Andres Ramon Cuellar Davila, Head of Equity Research Sales LATAM, GBM
"High quality investment research is critical for the efficient operation of any capital market. This is one way in which investment banks can unequivocally deliver constructive input as they redefine their role in society after the global financial crisis. However, as the authors deftly highlight, the business model for funding research has long been a challenging and rapidly evolving puzzle, making this book a compelling read for anyone interested in the evolution of financial markets."
—Damien Horth, Managing Director and Head of Research, Asia and Japan, UBS AG
"To most individual investors, sell-side analysts are in a 'black box.' And yet, they play a key role. This comprehensive and lucid examination of the responsibilities, incentives, compensation, performance, and the history of sell-side analysts delivers a powerful and much-needed introduction to the role that they play as market intermediaries."
—Yingmei Cheng, Florida State University
"The book provides some useful insights into the incentives analysts face and differences in the incentives faced by sell-side analysts and buy-side analysts . . . I recommend the book to those interested in the important questions of what analysts do, how their activities are funded, and the potential business models for sell-side analyst research in the future."
—Mary Benner, Administrative Science Quarterly
"Filled with rich data, Wall Street Research gives us a new understanding of the role of equity research in the financial services industry. It should be a go-to source for anyone who wants to learn about where equity research has been, how it has responded to important challenges and opportunities, and where it's likely headed in the future."
—Mark Chen, Georgia State University