The 2008 decline of large investment banks such as Lehman Brothers, Bear Stearns and Merrill Lynch helped smaller U.S. equity research firms, according to a Greenwich Associates study.
Larger bulge-bracket investment banks saw their equity research market share fall to 64.1% as of March 31, compared with 68.5% a year earlier and 73.1% as of March 31, 2008, according to the findings of Greenwich’s 2010 U.S. Equity Analysts Study.
The market share of midsize broker-dealers, regional firms and sector specialists was 32.4% in 2010, 28.9% in 2009 and 23.9% in 2008.
Independent research providers captured 3.4% of market share in 2010 compared with 2.7% in both 2008 and 2009.
The shift toward smaller companies, however, might not be sustainable, Greenwich Associates managing director Jay Bennett said in a telephone interview.
“I think the worst is over from the bulge-bracket perspective,” he said, noting that larger firms often have greater research capabilities and also extend a client’s reach into international markets.