Listed firms suffer due to lack of research

The UK’s listed companies have been hit by an accelerated decline in both the quantity and quality of sell-side analyst research following the introduction of the MiFID II directive, according to new research from Citigate Dewe Rogerson’s dedicated Investor Relations Practice.

Overall, 52% of UK companies in its 11^thAnnual IR Survey reported a year-on-year decline in the number of analysts covering them and 38% reported a fall in the quality of research. For European companies excluding the UK, the figures were 39% and 20%, respectively.

Citigate Dewe Rogerson believes the issue is particularly acute for the smaller and medium-sized listed companies¹, which already faced challenges in gaining institutional investor attention.

Sandra Novakov, Head of Investor Relations at Citigate Dewe Rogerson, says: “Analysts scrutinise companies, and this helpfully draws attention to them. The more pronounced decline in sell-side research in the UK means that high-quality, medium-sized and smaller companies face a very real risk that they drop off the radar of institutional investors. This can lead to a reduction in liquidity that is hard to recover from.

“The good news is that IR professionals increasingly see this danger and are taking proactive steps to address it, such as actively articulating their investment case and increasing roadshow frequency and effectiveness. It signals a change in approach.”