20,000 analyst names 'missing'

By Christopher Brown-Humes, FT.com site
Published: Nov 07, 2006

Thomson Financial last night vigorously denied claims by academics that nearly 20,000 analyst names were removed from a database of research recommendations.

An academic discussion paper to be presented to the American Finance Association, claims the names, which were available in Thomson's I/B/E/S earnings consensus database, were selectively removed. This could have allowed analysts to present a better picture of their performance than might have been the case, the report says.

Thomson said the claims were not true. Kathryn Durant, vice-president, content, Thomson Financial, said: "The names of the individual analysts remain in the database. However, they were not visible on the files seen by the academics due to an incomplete data feed. "

The authors of the report - Rewriting History - are Alexander Ljungqvist, of the Stern Business School and Centre for Economic Policy Research; Christopher Malloy, of the London Business School; and Felicia Marston, of the University of Virginia.

The authors found that on 19,892 out of 280,463 recommendations where an analyst's name had been present in September 2002, it had disappeared by May 2004. Analysts' brokerage firms were still identified, however.

"The ex-post anonymisations do not appear to be random; instead they are concentrated among the worst performing recommendations, " the report says.

The changes took place at the height of regulatory scrutiny of the analyst community - scrutiny led by Eliot Spitzer, the New York attorney general - and when many large investment banks were scaling back their research departments. I/B/E/S is widely used by investment professionals and academics.

Removing analysts' names makes it hard for investors, academics and the labour market to assess their track records properly, the authors say: "Tests in this study show that analysts associated with anonymisations experience more favourable career outcomes than their true track records would otherwise warrant. "

Ms Durant said Thomson was working to rectify the problem with feeds that had affected one part of the I/B/E/S data feed, but not others. She said brokerage firms could not make changes to the I/B/E/S database, as they had no direct access. She added that there had been no pressure from either brokerage houses or individual analysts for names to be removed from certain pieces of research.