Group Think in Financial Analysis? A Multivariate Study

Abstract

This multivariate behavioral research investigates if financial assessments made by analysts may be affected by the professional employment group or sector in which the analyst works. Professional financial analysts from two separate groups were studied. The two groups were analysts for state public service commissions who regulate the public utilities industry and professional private sector analysts who specifically follow stocks and bonds of public utility companies. Members of both groups were asked by way of a mailed survey to analyze multiyear comparative financial statements of a publicly traded electric utility company using variables related to liquidity, long term debt, cash flow, dividends, profitability, as well as the overall financial condition of the firm. The paper describes the data collection process, statistical analysis, and results of the research.