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Posted: Wednesday, Aug 22, 2007 at 0000 hrs IST

Updated: Wednesday, Aug 22, 2007 at 0036 hrs IST

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Mumbai, Aug 21: Reliance Money has emerged as the top brokerage in
terms of online security and cost effectiveness while Motilal Oswal is the most research-
driven stock trading platform, a survey says.

According to an online survey conducted by US-based Starcom Mediavest to study trends

on investors' choice of broking firms, Anil Dhirubhai Ambani Group firm Reliance
Money was voted as the top platform in terms of security and cost effectiveness.

Motilal Oswal led the general perception about being the most research-driven stock
trading player. While the respondents considered ICICI Direct as the most accessible, the
survey said.

In terms of respondents’ perception of the best online security, Reliance Money received
47% votes followed by ICICI Direct with 20% endorsements.

Although Reliance Money, which started its operations in April 2007, leads the tally on
online security, it is more favoured by business owners (54%) than retired individuals
(29%), the survey showed. It is also the first domestic brokerage firm in India to use web-
enabled kiosks for web-trading. It is also the first Indian brokerage company to provide a
digital security token to all its customers, the survey said.
For cost-effectiveness in stock trading, more than half (54%) believe that Reliance
Money is the best followed by 5paise.com, which got 15% votes. Reliance Money
operates on a flat fee structure as against the brokerage fee structure charged by other
players.

Meanwhile, just 7% respondents rated ICICI Direct as cost effective. Motilal Oswal
found favour with 34% respondents for being the most research driven stock trading
player. One-third respondents voted ICICI Direct as the most accessible player followed
by Reliance Money (21%) and Kotak Securities (18%) on the scale of accessibility.

The survey showed that Reliance Money gathered more favour from female investors
with 63% voting for Reliance as the best online security.

In terms of the period of investor relationship with the broking firms, more than 51% of
early users (less than one year) use Reliance Money as a partner. However, those who
have been trading for five years or more preferred ICICI Direct (29%).

Overall, when responses were added together and the weights decided on the basis of
each parameter, Reliance Money came out as the top scorer at (37), followed by ICICI
Direct (19) and Motilal Oswal (11).

Abstract:
The purpose of this paper is to examine the extent to which analyst's earnings forecasts are
influenced by brokerage house reputations in a UK setting. We use an I/B/E/S detail earnings
estimate history file, an SDC dataset for providing data on IPO underwriting activities (proceeds,
underwriting fees, and management fees), and data provide by the Institutional Investor (All-
Europe Research Team rankings) for the period June 1987 to March 2002. In short, we find that
analyst's earnings forecasts are primarily influenced by brokerage house reputations but not by
the proceeds of the IPO's or the underwriting and management fees charged for such services. In
particular, we find analysts that issue estimates on firms for which their brokerage houses were
the lead managing underwriter are statistically significant more optimistic than for firms they issue
estimates on, in which their brokerage houses were not associated with any underwriting activity.
Moreover, we also find evidence that there is some bias in the buy recommendations analysts
issue for these firms. In summary, our findings suggest that analyst's forecasts are biased and
more optimistic with respect to a brokerage firms' underwriting relationships. However, we do not
find evidence that this optimism bias is due to incentive based compensation suggesting a non-
incentive based theory may apply.

We make the following acknowledgements regarding this paper. First, we are grateful for the
financial support provided by The Leverhulme Trust and INQUIRE, EUROPE. Second, we thank
the contribution of Thomson Financial for providing data, available through the Institutional
Brokers Estimate System I/B/E/S. This data has been provided as part of a broad academic
program to encourage earnings expectations research.

Keywords: Analysts earnings forecasts, underwriting relationships, sell-side firms, brokerage

houses, optimism
JEL Classifications: G14, G12, G15, G29

Working Paper Series

Date posted: July 26, 2005 ; Last revised: September 09, 2005
Brokerage Houses and their Stock Recommendations: Does Superior Performance
Persist?

Brad M. Barber
University of California at Davis

Reuven Lehavy
University of Michigan - Stephen M. Ross School of Business

Brett Trueman
University of California, Los Angeles (UCLA) - Anderson School of Management

September 1999

Abstract:
This paper tests for the existence of performance persistence in brokerage house stock
recommendations. For the period 1987-1996 we show that purchasing the current-year buy
recommendations of the brokerage houses with the best prior performance earned an annualized
geometric mean raw return of 18.6 percent, while purchasing the recommended stocks of the
houses with the worst prior performance earned only 14.3 percent. After controlling for market
risk, size, book-to-market, and price momentum effects, though, we find no significant difference,
in general, between the abnormal returns of the best and worst brokerage houses. A series of
supplementary tests confirm this result. The findings for brokerage house sell recommendations
are even weaker. Overall, our tests provide no reliable evidence of performance persistence for
brokerage house stock recommendations.

JEL Classifications: G12, G14, G29

Working Paper Series

Do Analyst Conflicts Matter? Evidence from Stock Recommendations

Anup Agrawal
University of Alabama - Culverhouse College of Commerce & Business Administration

Mark A. Chen
Georgia State University - Department of Finance

July 2007

Abstract:
We examine whether conflicts of interest with investment banking and brokerage induce sell-side
analysts to issue optimistic stock recommendations and, if so, whether investors are misled by
such biases. Using quantitative measures of potential conflicts constructed from revenue
breakdowns of analyst employers, we find that the level of analysts' stock recommendations is
indeed positively related to the magnitude of the conflicts they face. The optimistic bias stemming
from investment banking conflict was especially pronounced during the late-1990s stock market
bubble. However, evidence from the response of stock prices and trading volumes to upgrades
and downgrades suggests that the market recognizes analyst conflicts and properly discounts
analyst opinions. This pattern persists even during the bubble period, contrary to popular belief
that investors threw caution to the wind during the bubble. Moreover, the one-year performance
of revised recommendations is unrelated to the magnitude of conflicts. Overall, our findings do
not support the view that conflicted analysts are able to systematically mislead investors with
optimistic stock recommendations.

Keywords: Stock analysts, security analysts, analyst conflicts, corporate governance, stock
recommendations, wall street research, brokerage research, conflicts of interest

JEL Classifications: G14, G24, G28, G29, G34, G38, K22, M41

Working Paper Series

What Determines the Market Impact of Stock Recommendations?

Abstract:
In this paper, we investigate determinants of the market impact of stock recommendations issued
by sell-side financial analysts. We propose a simple framework for understanding the process
that financial analysts use to issue stock recommendations. The framework yields three testable
predictions: The market impact of stock recommendations increases with analysts' perceived
ability and investors' uncertainty about firm value, and decreases with analyst experience after
controlling for analysts' innate ability. We empirically test these predictions and find consistent
results. Using Institutional Investor All-American analyst status to proxy for high perceived ability
and return volatility for uncertainty about firm value, we find that the market impact of
recommendations increases with analysts' perceived ability and return volatility. Using the
number of quarters an analyst has been issuing recommendations or earnings forecasts to proxy
for experience, we find that the market impact of recommendations decreases with analyst
experience after controlling for analyst-company specific effects. These results hold when we
control for other characteristics of financial analysts and brokerage firms that might affect the
market impact of stock recommendations. The results hold for recommendation revisions as well.

Keywords: stock recommendations, analysts' perceived ability, uncertainty about firm value,
analyst experience

JEL Classifications: G12, G24, G29, J44

Working Paper Series

Date posted: May 19, 2003 ; Last revised: May 23, 2003
Brokerage Services and Individual Investor Trade Performance

March 12, 2010

Abstract:
The discount stock broker has become an important channel of trade for individual investors. We
investigate whether the lack of value in traditional full service brokers has driven the popularity in
discount broking. We find that, conditional on the holding period, discount broker trades
significantly underperform full service brokers by an amount that is comparable or exceeding the
difference between typical brokerage rates. The poor performance of discount broker trades is
largely due to the lack of private information content in their market order trades, and their limit
order trades being ‘picked off’ by full service and institutional brokers. Conversely, full service
broker limit order trades earn short term gains while their market order trades generate gains over
a one year horizon, which is consistent with the usage of information and execution services
respectively. We conclude that full service brokers provide significant value to individual
investors, in contrast to recent evidence that all individual investors trade poorly. Our findings are
also in contrast to recent evidence concerning the value of broker channels in the mutual fund
industry.

Keywords: Individual investors, individual investor trade performance, market efficiency

JEL Classifications: G14

Working Paper Series

Do Brokerage Analysts' Recommendations Have Investment Value?

Kent L. Womack
Dartmouth College – Tuck School of Business

J. OF FINANCE, Vol. 51 No. 1, March 1996

Abstract:
An analysis of new buy and sell recommendations of stocks by security analysts at major U.S.
brokerage firms shows significant, systematic discrepancies between precommendation prices
and eventual values. The initial return at the time of the recommendations is large, even though
few recommendations coincide with new public news or provide previously unavailable facts.
However, these initial price reactions are incomplete. For buy recommendations, the mean post-
event drift is modest (+2.4%) and short-lived, but for sell recommendations, the drift is larger (-
9.1%) and extends for six months. Analysts appear to have market timing and stock picking
abilities.

JEL Classifications: G1

Indiabulls Securities assigned highest broker rating - Crisil

08.23.07, 5:58 AM ET
 Popular Videos MUMBAI (Thomson Financial) - Indian rating agency Crisil
assigned its highest broker rating, 'BQ~1', to Indiabulls
Securities Ltd.
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research and information services offered to customers by
ISL.

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http://excellence.thomsonreuters.com/awards/starmine/broker-rankings/2009

Motilal Oswal Financial Services Limited Non Banking Finance Company Short Term
Debt P1+ Motilal Oswal Securities Limited Non Banking Finance Company Bank
Guarantee limit P1+ Short-Term Bank Facility P1+ Short Term Debt P1+

Indiabulls Securities Limited Broking Company Bank Guarantee limit P1+ Short Term
Debt P1+ Broker Grade BQ1