We raised simple questions to asset managers, asset owners and listed companies about research integrity/potential conflicts of interests in a MiFID2 environment.

Key findings

• Overall Asset Managers (35%) and Asset Owners (35%), followed by Listed Companies (26%) see compounded rising risks to research objectivity. Stakeholders have aligned answers indicating that the issue is getting prominence.

• 52% of all respondents see a high level of impact on research integrity “when the research provider seeks to do business with covered companies” (63% for asset owners, 59% for asset managers and unsurprisingly 47% for issuers).

• Submitting research to listed companies before publication is seen as the second highest risk of conflict of interest by Asset Managers (41%).

• 69.2% of respondents consider that « potential conflicts of interests » could be better disclosed/displayed in research reports. 100% of Asset Owners believe so.

What is it all about

To confirm feedbacks from Asset Managers, Listed Companies and Asset Owners, we launched a survey to better qualify how research integrity is perceived since MiFID2 has been live.
We stress that survey is focused on research integrity rather than independence, as most investors find independence hard to define. Then we decide to scan the frontiers of integrity to identify the most relevant issues.

Our take

In a MiFID2 world where contract-research and corporate driven business are viewed as unwanted consequences of this new regulation, this survey highlights that potential conflicts of interests could be better disclosed in research reports.
Investors appear concerned about the true interests of research firms in producing research that is first of all intended for listed companies.
ESG fund managers are more severe than traditional long-only peers about research integrity. It confirms a clear trend: ESG assets can’t be managed using conflicted research and data.

Survey Methodology

We asked questions about different dimensions of research providers concerns: Business Model, Analyst and Corporate Interests. This survey was conducted between November 22th and November 29th 2018, via a direct mailing to AlphaValue’s contact base. 254 professionals responded to this survey (33% Asset Managers, 60% Listed Companies, 7% Asset Owners).

Download the survey results report : click here