Invisible colleges consist of small groups of scientists within any given research area that monitor the changes taking place in their field by staying in contact with one another (Price, 1963) before, during, and after meetings of professional associations (APA, 1968; Garvey & Griffith, 1968; The Johns Hopkins Center for Research in Scientific Communication, 1969). Invisible colleges exist among workers in business and industry as well as in academia, based both on substantive issues as well as social ones (Campbell, 1975). "Old boy networks" are a valuable source of information which continue to influence the way securities analysts gather information (Danzig & Wells, 1993).
Prestige, such as through rankings, influences information access and seeking. The APA (1963) and Menzel (1966) concluded that in order to locate significant work in their fields, scientists select articles based on the identity of the authors; indeed, the research of physicists of high rank is more likely to be read because of their visibility (Cole & Cole, 1967). In general, the amount and variety of information consumed by scientists and engineers are strongly correlated with their performance (Allen, 1969; Parker, Lingwood & Paisley, 1968; Shilling, Bernard & Tyson, 1964).
Although the amount of time spent marketing their research varies from firm to firm (on average top analysts spend 45% of their time marketing to clients), many analysts in a Wall Street survey noted that excessive marketing can have a negative impact on their research (Top Analysts Spend Almost Half Their Time on Marketing, 1986, p. 1).
Securities analysts who work in investment firms of varying size and prestige have access to different staff and resources to assist them in acquiring information and writing research reports, attending conferences, meetings and visits to the companies they cover, and use of printed and computerized resources. Securities analysts who work in information rich firms have heightened visibility, stand a better chance of being ranked, and receive higher pay as their research is more widely distributed. Securities analysts who attend more annual meetings and trade shows have greater access to contacts outside of their firm.
Aguilar (1967), Allen (1977) and Rosenbloom and Wolek (1970) found that experience is a significant influence on the information/communication channels used by scientists and technologists. When analysts begin coverage of a new company, they spend a lot of time obtaining historical information from the library. But as their coverage of the company or industry continues, they have less need for background type information. They depend on the data analysis and current statistics they obtain from their own computerized resources. In turn, the time required to perform this research increases the amount of hours they work.
Gender studies indicate that women in many male dominated professions are more likely to be passed over for promotion and receive less recognition and lower pay than their male counterparts (Cannings, 1988; Danzig & Wells, 1993; Uchitelle, 1993). Older workers are more likely to stay at their job for a longer period of time than younger workers, and are as satisfied and productive, if not more so, than younger workers (Galagan, 1990; Smith & Hoy, 1992). Employees who hold MBAs or PhDs experience greater income (Jones, 1990) and place greater emphasis on job satisfaction than on financial success (Berney, 1990). Membership in professional associations is an indication of professional interest and leads to higher productivity and satisfaction. It also provides an entree to contacts who can promote analysts in the rankings. Ranking and other forms of professional visibility such as membership in professional associations appear to lead to greater income (Nudell, 1992).
May Day 1975 brought about an end to fixed commission rates for stock and bond trading in the United States, as a result of a ruling by the SEC (Gillis, 1985, p. 16). This forced clients to bargain for the cheapest fees, and analysts to market their research to institutions in an effort to bring in trades and justify their salaries (Kleinfield, 1985), resulting in fewer hours spent on research, and shorter and more frequent reports. The deregulation of London's securities markets on October 27, 1986 contributed to the internationalization of financial markets by making it easier to compete in the international arena (Nicholas et al., 1987). The stock exchange abolished its system of minimum commissions and introduced its new computer-assisted dealing system -- Stock Exchange Automatic Quotations (SEAQ) -- which displays prices on a continuously updated basis (Rider, 1987). The October 1987 stock market crash caused all the major markets to lose a large percent of their value. This interconnectedness and the growing activity within the capital markets has increased the need for quick and accurate information, facilitated by information systems available to traders and securities analysts (Lohr, 1986).
Several U.S., U.K. and European industry studies are conducted regularly. The studies rank individual securities analysts and equity research departments in investment firms.
More review, and more details on hypotheses, method and results, are available in Baldwin & Rice, 1997.
A questionnaire was developed and pre-tested using 10 securities analysts. Telephone interviews were conducted with the securities analysts selected by the random number tables. If the analyst decided not to participate in the study, the telephone call was terminated and the next number on the random number table was used to choose another analyst. The interview tapes were transcribed and coded.
More analysts in foreign firms and domestic regional firms have limited journal and database usage due to budgetary constraints than do domestic full-service firm analysts. 77% of the analysts, especially those in domestic full-service firms, responded that they or their staff use commercial databases. Some receive earnings information faxed directly from the companies, or corporate news and press releases by e-mail and messenger.
79% of the analysts responded that they find analyst meetings to be valuable or extremely valuable. One foreign firm analyst said, "The companies are normally prepared to give out more information at an analyst meeting than at any other time." 49% of the analysts responded that they obtain valuable information from trade shows, and find trade shows a good place to network, gossip, develop industry contacts, talk to competitors and see how users are responding to a company's products. 65% of the analysts responded that time is a major factor in the number of annual meetings and trade shows they attend. Most of the domestic analysts replied that they depend almost entirely on informal information. 77% of the analysts responded that they check on the reliability of the information they obtain informally; one method is to check it formally with someone at the company, and the other is to confirm it with several different independent sources, such as their customers and competitors.
80% of the analysts responded that they send copies of their research reports to the news media. One domestic full-service firm analyst commented: "Analysts have a good reason to send their reports to the news media, because it helps enhance the distribution of the report and also creates media awareness that the analyst exists." 53% of the analysts responded that they are writing shorter reports, while 10% indicated that they are writing longer reports. One analyst said that they are producing shorter day-to-day pieces, which they fax or e-mail to their clients. 54% of the analysts responded that they are spending more time marketing their research, at the cost of "keeping in touch with your companies and your industry."
73% of the analysts responded that they are satisfied with their research. However, as one said, "By the time you get every single little thing the stock price has already moved, so it is of no value." The most frequent source of dissatisfaction seems to be management's failure to disclose enough information about the company.
There are two significant canonical correlations among individual characteristics and institutional resources, with information sources and communication channels, explaining 58% and 46% of the variance, respectively.
Overall, individual influences have little significant canonical influence on the use of information/communication channels. Analysts who make little use of their internal libraries, and who are influenced by cost and time restrictions, tend to communicate more frequently with company executives and attend fewer annual meetings and trade shows. The second canonical correlation shows that analysts who have less experience, are members of analyst associations, have a support staff, and work for large regional firms, tend to read more newspapers, communicate more frequently with company executives, and make greater use of external contacts.
The canonical correlation between information/communication channels and outcomes is not significant, although it explains 20% of the variance. The information/communication channels variate is characterized by the influence of frequent external communication with company executives, and the infrequent use of personal files on ranking and productivity. The outcome variate is characterized by analysts who are ranked in the polls, and who publish a large number of research reports.
The partial canonical correlation (of individual and institutional influences on outcomes, controlling for intervening information sources) is significant, explaining 40% of the variance. Overall, analysts who are experienced, work for full-service firms, have access to a staff, and made infrequent use of their internal libraries, (individual characteristics and institutional resources variates) tend to published fewer research reports, and are more likely to be ranked (outcome variates) independent of the intervening influence (if any) of the use of communication channels and information sources.
Securities analysts think of themselves as gatekeepers in their organizations. Librarians can also serve as gatekeepers by constructing databases of useful contacts and valuable resources both inside and outside of the firm.
The construction of a "virtual" or "digital" library also necessitates the need to work more closely with other technology professionals within the firm. Most corporations have an Information Technology Department which is responsible for implementing and maintaining the firm's technology. As library professionals are also interested in providing "desk top" applications to users, it seems logical that these two groups of information professionals could work closely together or even merge to form one department to provide securities analysts and other user groups with the best and most timely information available. Unfortunately, the professional cultures of the two groups seem to clash.
Corporate libraries no longer have the need or the resources to develop large research collections, nor do they want or need detailed cataloguing. In The Value of Corporate Libraries Study 53% of the senior managers surveyed wanted all workers to have access to on-line databases via networks, 6% wanted more end-user training, and 12% wanted a connection to the Internet (Matarazzo & Prusak, 1995, p. 18-19). These are areas in which information professionals should and can play a major role, if they have adequate technological expertise. Working librarians need to update their technological skills through continuing education courses and seminars offered by library schools, programs and conferences presented by professional associations, and frequent communication with publishers and vendors.
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