Firms Build Up Accounting Teams
Byline: Lynn Strongin Dodds
Accountancy research is becoming an increasingly important part of a brokerage house's offering.Firms are strengthening teams, adding more accounting information in reports and producing more special accounting notes to help their clients better understand the nuances of US, UK and continental European, as well as international, accounting standards.
One senior researcher says: "Most companies push the envelope as there is a natural tendency for people wanting to paint the best picture as possible. However, others, such as Enron and WorldCom, clearly stepped over the line.
"It would be great to have one international standard that incorporated the best of breed from around the world. But that is not going to happen any time soon. As a result, there is a need for investors and analysts to have a clearer understanding of what to look for and how different accounting standards can impact the bottom line."
UBS Warburg, for example, recently hired David Bianco as head of its US valuation and accounting research group to strengthen its global accounting analysis coverage. Although Bianco, who was with Deutsche Bank, will be based in the US, he will report to Stephen Cooper, global head of valuation and accounting research who runs the group from London.
According to Cooper, the group started in 1997 and has grown to three in London - two in the US including Bianco - plus the three sector accounting analysts. The focus five years ago was mainly on UK accounting issues.
He says: "There is definitely a greater demand for our research. In a bull market, people tend to look at the numbers at face value, but we have always encouraged clients to look at them in much more detail.
"Accounting is not black and white and there are many complexities. Many of the things that are being written about are not new, such as off-balance sheet items, but we now spend a lot more time helping our clients better understand these issues. …