Author(s): Nielsen C
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Abstract PURPOSE: This article contributes to the understanding of how health care companies may communicate the business models by studying financial analysts' analyst reports. The study examines the differences between the information conveyed in recurrent and fundamental analyst reports as well as whether the characteristics of the analysts and their environment affect their business model analyses. METHODOLOGY: A medium-sized health care company in the medical-technology sector, internationally renowned for its state-of-the-art business reporting, was chosen as the basis for the study. An analysis of 111 fundamental and recurrent analyst reports on this company by each investment bank actively following it was conducted using a content analysis methodology. FINDINGS: The study reveals that the recurrent analyses are concerned with evaluating the information disclosed by the health care company itself and not so much with digging up new information. It also indicates that while maintenance work might be focused on evaluating specific details, fundamental research is more concerned with extending the understanding of the general picture, i.e., the sustainability and performance of the overall business model. The amount of financial information disclosed in either type of report is not correlated to the other disclosures in the reports. In comparison to business reporting practices, the fundamental analyst reports put considerably less weight on social and sustainability, intellectual capital and corporate governance information, and they disclose much less comparable non-financial information. RESEARCH IMPLICATIONS/LIMITATIONS: The suggestion made is that looking at the types of information financial analysts consider important and convey to their "customers," the investors and fund managers, constitutes a valuable indication to health care companies regarding the needs of the financial market users of their reports and other communications. There are some limitations to the possibility of applying statistical tests to the data-set as well as methodological limitations in relation to the exclusion of tables and graphs.
This article was published in J Health Care Finance
and referenced in International Journal of Accounting Research