Professional Securities Analysts Meet Professors Of Financial Analysis: A Pilot Study Of Financial Statement Assessment Differences

Abstract

This multivariate behavioral research investigates whether the financial assessments made by professors of financial analysis differ from those made by private sector financial analysts.  Professors of financial analysis and professional private sector securities analysts were put into separate groups for the study.  Members of the two groups were asked by way of a mailed survey to analyze multi-year comparative financial statements of a business enterprise using variables related to liquidity, long term debt, cash flow, dividend prospects, profitability, and overall financial condition.  The study found a significant statistical difference in assessment results of the analysts and the professors. These results indicate that general purpose financial statements convey different information to the two user groups.  The paper describes the data collection process, statistical analysis, and results of the research as well as limitations and a call for additional research.