In late August, the UK’s Cass Business School published a research paper looking at the effects of Mifid II on sell-side analysts, buy-side analysts and firms themselves.
Unsurprisingly, the authors – Bingxu Fang and Ole-Kristian Hope of the Rotman School of Management, Zhongwei Huang of the Cass Business School and Rucsandra Moldovan of the John Molson School of Business – found that the number of sell-side analysts covering European firms have fallen post-Mifid II and that buy-side firms have turned more to in-house research to replace this coverage.
The academics took a sample construction of all public firms headquartered in the 31 European Economic Area (EEA) countries, from 2015 to February 2019. They then constructed a control group of US and Canadian firms over the same time period.
The research shows that 334 European firms have completely lost their analyst coverage since Mifid II was introduced, showing that the fears that firms will suffer a loss, and sometimes a complete loss, of sell-side coverage following the implementation of Mifid II have turned into a reality.
However, the vast majority of the firms that lost coverage completely (305 firms, or 91%) only had one analyst following them in 2017.
