Biased Reporting
According to the Financial Supervisory Service, the 10 major securities firms in Korea released a total of 48,762 analysis reports between 2011 and July this year. However, only three of the reports over the past 4 years have suggested selling, whereas 91.42 percent of them have suggested buying. The rest gave a neutral opinion.
Not a single sell report was issued by the top five financial firms: Daewoo Securities, Woori Investment & Securities, Samsung Securities, Korea Investment & Securities, and Hyundai Securities. They did, however, release 2,842 neutral reports. All three sell reports between 2011 and today were released by Daishin Securities.
Meanwhile, foreign securities companies in Korea showed relatively more balanced opinions. The 14 foreign securities companies published 21,222 reports during the same period, which were divided into 1,876 sell opinions, 13,082 buys, and 6,273 neutral.
The bias inherent in the part of the Korean broker houses can be attributed to corporations’ refusing inspection visits and many other forms of pressure they have put on those issuing a sell report.