Analyzing The Analysts: The Development Of New Quantitative Tools For The Evaluation Of Equity Research  

Oleh:

Field, Graham

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Business Information Review vol. 22 no. 1 (Mar. 2005), page 38-45.
Topik: accuracy quotient; assessment; broker research; equity research; evaluation; financial analysis; investment advice; prediction; quantitative tool; ranking; recommendation quotient
Fulltext: 38.pdf (382.02KB)

Isi artikel

AQUTE is an online product, developed by AQ Research in collaboration with Bureau van Dijk, to facilitate the process of equity research ranking of companies and take account of factors that are usually measured by opinion polls and by objective performance measures. The analysis sets out to judge research analysts on the performance of their own products, including the forecasts and recommendations which are included in virtually every research report issued by investment banks and research houses, using two key metrics: the Accuracy Quotient (AQ); and the Recommendations Quotient (RQ). The AQ metric takes account of three factors: the percentage difference between an analyst’s forecast of a company’s earnings per share (eps) and the eps value which the company actually reports; the number of changes made by the analyst to the forecast over a two year period; and the average size of those changes. The RQ metric measures the performance of recommendations made by analysts in a wide range of factors, including: simple buy/sell advice; highly speculative advice; take profits advice; and trading buy advice. The process provides standardized recommendations which are assessed over the past 12 months to assess the accuracy of the forecasts. The practical applications of the technique include: assessing which brokers are best; screening the consensus; identifying predictable companies; and determining how predictable are the company earnings. AQUTE analysis has as its ultimate aim the ability to contribute to a better understanding and use of the large volume of equity research that is produced by current business analysis.

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