Financial analyst reports: reliability and liability

Financial analyst reports are the main sources of financial markets’ public information. They give account of the economic and financial situation of a certain company, institution or country in a certain period, providing information, evaluations and recommendations. Analysts are supposed to possess high standards in professional requirements (e.g. those demanded by the Chartered Financial Analyst Institute), and are bound to comply with the Code of Ethics and Standards of Professional Conduct. Their reports display specific sections highlighting their compliance with certain regulations and their boundaries in terms of applicability, reliability, credibility, liability and audience. This chapter is part of an ongoing research on analyst reports from an interdisciplinary perspective, including linguistics and behavioural finance, as further discussed in the next paragraph. The aim of the present study will be to investigate the legal disclaimers and disclosures of analyst reports issued by Goldman Sachs Research, S&P and Moody’s in the period May 2007 – November 2011. The focus of the investigation has been on the discourse and linguistic strategies analysts employ, on the one hand, to meet the requirements under the laws and regulations of jurisdictions they have to comply with, and on the other, to manage their client relationships. Therefore, the present study will start by following Bhatia’s applied genre-analytical model (2002: 16-18) and by examining the legal aspects of the reports from several perspectives. The textual investigation will focus on the formal and functional features of these disclaimers, both embedded in the reports and more broadly specified at the end of each document. The reports have been studied as a genre specific of social, institutional and professional settings, where financial and legal discourse intermingle, and as social practice, concentrating more on the communicative purposes of the texts. The present chapter will enable us to gain useful insights regarding relevant aspects in terms of discourse structure, protagonists (writers, readers and social actors), and communicative functions of the disclosures through a qualitative (e.g. modality, hedging, terminology) and a quantitative analysis (content words, semantic associations and concordances through Wordsmith Tools 5.0).