The Buy Bias in Brokerage Reports and Discussion of Anonymous Reports
Buy bias in brokerage reports, the credibility of domestic reports, and conflicts of interest controversies Before making an investment decision, check whether there is excessive optimism and quickly review only the key points
There have been continued criticisms that domestic securities firm reports are excessively tilted toward buy recommendations. In July, among the top 10 securities firms, only Kiwoom Securities issued a report containing a sell recommendation, and most reports from major securities firms were buy recommendations.
A similar trend is confirmed in longterm statistics as well. An analysis of about 730,000 domestic securities firm reports from 2000 to 2024 found that the rate of maintaining buy recommendations exceeded 97%, and cases of downgrading from buy to hold were very rare. The researchers interpreted this phenomenon as excessive optimism.
Behind this bias, conflicts of interest between research work and corporate finance and investment banking (IB) activities are cited. Financial authorities are pushing to disclose analyst performance and introduce anonymous reports that do not reveal names, but questions remain about their effectiveness because the relationship between securities firms and companies still remains. The article emphasized that investors need to view securities firm reports critically.