Examining Investment Information Sources for Sophisticated Investors Using Cluster Analysis

In order to contribute to studies of sophisticated users of financial information, cluster analysis is applied to assess the degree of similarity in the use of information sources between and within two groups of sophisticated users. Interviews were conducted with 21 individuals working as investment analysts for stockbrokers and 12 individuals working for institutional investors. All interviews were based on one company operating in an industrial sector that was of prime interest to the interviewees. The study confirms the general conclusions of previous research on the respective sources of information, but demonstrates significant differences between investment analysts and institutional investors. The use of cluster analysis also reveals the deficiencies of concentrating on a hierarchy of information sources, and demonstrates that users employ a limited range of sources but use these in different clusters or groups. Investment analysts tend to use short-term information that is routinely received, whereas institutional investors actively seek information of a less short-term nature.