Approach One: Context Perspective

Abstract

This chapter describes the first research stage which consists of the context analysis of financial analysts’ text production, based on an ethnographic summary and on interviews with financial journalists.

Financial analysts are embedded in a scaling, interdependent system. This context influences their text production and processes and—vice versa—their text production and processes shape their working environment. Having been employed in this environment, I realised early on that financial analysts’ context and language awareness, cross-domain translation, and their text products’ comprehensibility and comprehensiveness (Sects.  2.3–2.7) do not correspond with their audience’s financial literacy (2.5). This mismatch was especially salient when even financial analysts’ peers did not understand the reasoning in their colleagues’ investment recommendations. To have records of this phenomenon for a larger study, I took field notes during the years in which I was working in the financial sector. The result was a long-term ethnography spanning over 25 years, focusing on the professional setting of financial analysts.

In order to gain a complementary perspective on financial analysts’ working context, I collected and analysed data on financial journalists’ professional setting as well. Financial analysts and financial journalists share common ground: they largely tap on the same sources of information for their text products, and they often write for the same addressees.

In the following, I formulate the research question from a context perspective (4.1), describe the ethnographic data set (4.2) and the method (4.3), discuss the results (4.4), and draw an interim conclusion from a context perspective.

1 Research Question

This chapter investigates the situation of financial analysts in their team, the bank, in the financial community, and in the financial world in general. From this context perspective, the research question (Chapter 1) reads as: What are the characteristics of the financial analysts’ environment?

2 Data

The writing conditions influence text production and writing processes. In reverse, text production and processes shape the writers’ working environment. For this reason, I have collected data on the two main professional writer groups who write for investors: financial analysts and financial journalists. The data in this part includes an ethnographic summary which provides insight into sense-making practices in the banking sector for the years 1989 to 2014, in which I worked for several Swiss banks. In order to validate this data, the corpus of annual ethnographic summaries was assessed by five experts in the professional field (4.2.1). The ethnographic summary is complemented by a corpus of half-standardised interviews with financial journalists, shedding light on these stakeholders’ working and writing conditions in the financial community (4.2.2).

2.1 Ethnographic Summaries

The data in the form of ethnographic summaries provides insight into the banking sector as the institutional environment of financial communication. It does so in the form of a summary based on ethnographic narrative data. In the following, I will explain the context in which the data was collected (4.2.1.1), the processing of the data (4.2.1.2), the structure of the data set (4.2.1.3), as well as the validation of the data by experts in the field (4.2.1.4).

2.1.1 Context of Data Collection

From 1989 to 2014 I worked for several Swiss banks. In these 25 years, I took field notes and wrote memos of my observations as I had in mind to conduct a larger study at some point in time. After each year, I have condensed this data in an annual ethnographic summary. On the one hand, the ethnographic summaries provide insight into the banking sector and its development for the time period 1989 to 2014. On the other hand, they shed light on the organisational context and writing conditions in which financial analysts’ texts emerge. The bank-internal context influences text production and processes and—vice versa—text production and processes shape the working environment (see Sects. 4.4.1–4.4.5, and Chapters 5 and 6).

2.1.2 Processing the Data

For the ethnographic summaries, I chose the most representative and pivotal events of each year when I revisited the gathered material. The data consists of field notes, memos of my observations, bank-internal documents, significant publications, letters and emails, as well as personal correspondence of the time. Topics include the economic environment that influenced the daily banking business, developments of work processes, bank-internal matters, as well as social issues that occurred in these years. Taken together, the ethnographic summaries provide an overview of a long-term and intensive participation and observation in the banking sector. For reasons of data protection regulations in the financial industry, the data is not disclosed in detail.

2.1.3 Structure of Data Set

The first part of the data set provides an overview of the pivotal histo-economical events of the period 1989 to 2014. The second part consists of the summaries of my ethnographic notes in the same time frame. In the third part, I list the statements of five experts in the banking sector who have assessed and validated my data set of ethnographic summaries (4.2.1.4).

2.1.4 Validation of Data by Experts in the Field

My long-term and intensive participation and observation in the banking sector reflect my personal perspective. In order to validate this view, I asked five experts to assess the corpus of ethnographic summaries. All of the experts have worked in the corresponding banks at the time and are experienced professionals in their field. The full-length experts’ statements are quoted in Appendix A. In the following, I provide key extracts for each of their testimonies.

Yasemin Diethelm-Ersan¹

Stock analyst medical and biotechnology, lic. oec. HSG

“I have read the ethnographic summary repeatedly. It was exciting and reminded me of my own time in the banks […]. In addition to the financial contents, the personal anecdotes in the summary also reflect what I remember from my time in the banks and the stories of my friends. In this sense, I believe that the ethnographic summary of these 25 years provides a coherent overview of all facets of the Zurich banking world.”

Dr. Georg Eggenschwiler

Editor and proof-reader

“As far as I was able to follow the developments in the financial sector in the 1990s as the final editor of a financial journal and in the years 2002 to 2011 as an editor at Bank 2, first from the outside and then from the inside, the descriptions of Marlies Whitehouse largely correspond to my experiences. This is true for the general internal conditions of the bank and especially with regard to the writing skills of the financial analysts.”

Beat Grunder

Financial analyst, lic. rer. pol. University of Berne

“The ethnographic summary provides a remarkably good picture of the situation and developments in the banking or analytical sector from the late 1980s to the recent past. [...] The overall mood (process and people) – underpinned by spicy individual events – reflects this development very realistically and impressively.”

Ursula Gysel

Client advisor in commercial client business

“I can only confirm the observations made by Mrs Whitehouse. We were in the final stages of a period in which more emphasis was placed on long-term and mutually satisfactory customer relations than on quick profits. The client advisor then became a salesman with a budget for mortgages, loans and insurance.”

Martin Peter

Former Member of Executive Board UBS Switzerland AG,

Managing Director, Attorney-at-law

“I have read the Ethnographic summary of 25 years in the banking world that was sent to me. The depiction of the events in the banking world is correct, and the development of the Swiss financial centre that goes hand in hand with this is largely in line with my personal experience.”

2.2 Interviews

The data consists of a corpus of half-standardised interviews with financial journalists, shedding light on these stakeholders’ writing conditions and working environment. In the following, I will explain the context in which the data was collected (Sect. 4.2.2.1), the gathering of the data (4.2.2.2), the coding of the data (4.2.2.3), as well as the structure of the data set (4.2.2.4).

2.2.1 Context of Data Collection

In the wake of a conference presentation I gave in April 2017 (Whitehouse, 2017b), I was approached by b-public, an agency focusing on financial communication (https://www.b-public.ch/en/home-en/). The CEO of b-public asked me to collaborate in conducting a study on financial journalists. We agreed on two goals: first, we wanted to have indications how the financial journalists’ working environment and their need to deliver lurid stories impact their text production; and second, we wanted to find out to which extent, in their own view, financial journalists take their target readers’ financial literacy into account. On the one hand, the results should provide those responsible for the specialist media with pointers for possible reflection, strategies and measures in practice. On the other hand, the results should help educational institutions ensure that a broad readership understands the language of numbers. The results of the study were published in 2019. The title pointed at one of the key findings: “Finanzjournalismus im Spannungsfeld von Fachwissen, Stories und Finanzliteralität” (Whitehouse, 2019).

2.2.2 Gathering the Data

In the role of an associate researcher of b-public, I conducted twelve half-standardised interviews with financial journalists in Switzerland. The interviews took place between fall 2017 and spring 2018. Whenever possible, I visited the interview partners at their workplace, which allowed for insights into the financial journalists’ working environment. In some cases, the financial journalists came to b-public’s office. With the consent of the interview partners, all of the interviews were recorded on mobile phone.

2.2.3 Coding the Data

To code the data, I first transcribed the sound files using the software HyperTRANCRIBE. Second, I coded the financial journalists’ statements applying a coding scheme with three main categories: ethnography, including codes on the journalists’ career, network, and expertise; practice, including codes on the journalists’ reported activities of obtaining information, using source texts, and collaborating with financial experts; and financial literacy, including codes on the journalists’’ basic knowledge, mediation activities, and organisational quality assurance.

2.2.4 Structure of Data Set

For reasons of data protection, the names of the financial journalists who were interviewed are anonymised. The transcripts in the interview corpus are labelled using the following nomenclature: genre_language_sub-corpus_file number. This results in file names such as, “inter_G_FJS_1”, which reads: data category interview (inter), language German (G), Financial Journalist Study (FJS), and interviewee number 1 (1).

3 Methods

To analyse the research question from a context perspective, three methods were applied and combined: ethnographic context analysis (Sect. 4.3.1), half-standardised interviews and Grounded Theory (4.3.2).

3.1 Ethnographic Context Analysis

Investigating real-life processes and structures in order to reframe and understand them from multiple perspectives requires including an ethnographical approach. Therefore, ethnographic context analysis was applied. It results in the ethnographic summaries which are based on ethnographic field work from 1989 to 2014 (Sect. 4.2.1).

Ethnography explores sense-making practices of a particular community—here financial analysts—in their natural setting and from their own perspectives. Such, ethnography sheds light on the community’s practices from an inner, “emic” perspective and relates them to outer, “etic” perspectives (e.g., Keating, 2001, p. 288, drawing on Pike, 1954). The focus in the emic perspective is reflected in the ethnographic quality criteria of confirmability: the criteria requires that not only the academic community, but also the practitioners involved recognise the ethnographic data as correct and meaningful (validation of ethnographic data in Sect. 4.2.1).

The ethnographic data of this study is based on field immersion and spans over 25 years. The ethnographic summaries provide insights for all of the three chosen approaches: context, product, and process. Rich points in ethnographies (Agar, 2010), in line with basic insights from integrative social theories such as Realist Social Theory (e.g., Carter & Sealey, 2004, based on Layder, 2018), allow for conclusions from situated activities on the micro-level to structures on organisational (meso) and societal (macro) levels, for example, from practices in a financial analyst workplace to implicit conditions for communication in a financial institution (Chapter 4, context perspective) or for the role of financial literacy in society at large. Thereby, field knowledge enables researchers to contextualise, e.g., text features (Chapter 5, product perspective) and to interpret situated activity in the “empirical domain” as traces of “what is going on” (Sealey & Carter, 2009, p. 75) beyond the observable (Chapter 6, process perspective).

3.2 Half-Standardised Interviews and Grounded Theory

Since I wanted to triangulate my ethnographic data and findings from a complementary perspective but had no possibility to generate ethnographic data in financial journalism, I conducted half-standardised interviews with financial journalists (Sect. 4.2.2), selecting the cases and coding the data using procedures from Grounded Theory. In comparison with the ethnographic summaries of the banking sector (4.2.1), these interviews allow for an indirect, mediated access to the working environment: the financial journalists told me what they can tell me and what they want to tell me about their professional setting and their work context. The following questionnaire was the basis for each of the interviews.

• Question 1

  Through which stations did you get to your current profession and to your workplace?

• Question 2

  What role did the topic of finance play in your education/training as a journalist?

• Question 3

  Do you have any training in the field of finance, business administration, or similar?

• Question 4

  What role do brokers and financial analysts and their recommendations play for you?

• Question 5

  How much time do you have on average to research an article? How do you conduct your research?

• Question 6

  What effect on your work do you expect of the MiFID II (Markets in Financial Instruments Directive II) which will come into force at the beginning of 2018?

• Question 7

  How do you treat source texts (e.g., press releases) when you write an article?

• Question 8

  What do you do if source information is unclear to you?

• Question 9

  When, why, and which financial experts do you quote in your articles?

• Question 10

  What financial literacy do you expect the reader of your articles to have?

• Question 11

  Which stations in the document cycle see/edit your articles before they are published?

For the selection of the cases and the analysis of the interviews, Grounded Theory (GT) was applied. GT helps researchers generalise findings from case studies comprehensibly and set up mid-range theories regarding “what works for whom in what conditions” (Pawson & Tilley, 1997, p. 72). GT enables the researchers, on the one hand, to analyse individual cases in depth and in detail, and on the other hand, be generalised from comparisons between systematically selected cases. In GT, data, for example, on the strategies and practices of financial journalists, is generated and analysed case by case. With each new case, former generalisations are reconsidered and, if necessary, altered, which results in modified and empirically stronger grounded theoretical assumptions. To scrutinise these assumptions in a next cycle, yet another case that bears the largest potential to falsify the theory so far is identified and analysed. Thus, the results of each case influence the theory that emerges and the selection of new cases—until a valid generalisation is made for all cases examined is present. This point of theoretical saturation is reached when it becomes apparent that a new case hardly brings new knowledge.

4 Results

The results explain the complex environment in which financial analysts work. In this environment of domain-specific opportunities and constraints, numerous agents interact on scaling levels and in scaling timeframes. The analysts are part of various context ranges within the financial world, which need to be understood before looking at financial analysts’ texts and their practices and processes. This chapter discusses the influences, forces, and areas of tension to which financial analysts are exposed as professional writers: the writing situation of financial analysts (Sect. 4.4.1), the analyst team (4.4.2), the bank (4.4.3), the financial community (4.4.4), and the financial world in general (4.4.5).

4.1 Context Range 1: Writing Situation of Financial Analysts

The financial world connects actors from stock exchange traders to investors and the public at large. This section focuses exemplarily on analysts, because their recommendations and assessments have proven to have the strongest influence on stock exchanges and markets compared with other actors (Rolke & Wolff, 2000). Financial analysts are experts who prepare economic data from the areas of equities, bonds, funds, and sustainable investments, develop short- and long-term forecasts and estimates from a micro- and macro-view, and finally make appropriate recommendations. They are professional writers and find themselves every day in a complex environment between competing colleagues, legal regulations, specifications and interests of companies, investors, journalists, as well as their employer (often a bank or broker). Moreover, financial analysts need to find a sophisticated line of argumentation for their recommendations: one the one hand, investors should trust the analysts’ assessments as experts (see also Sect.  5.4.2), as “trust is a key focus” (Laskin, 2017, p. 3) in financial communication. On the other hand, financial analysts cannot be held responsible for their recommendations (see also Sect.  5.4.1). Financial analysis texts are thus created in a complex structure of factors that can be summarised in general terms in the sense of Jakobs’ shell model. (Following Jakobs, 2006; Fig. 4.1).

Fig. 4.1

(Following Jakobs [2006])

Writing situation of the stock analysts in context

Financial analysts are divided into different groups according to their field of activity: there are analysts for market trends, technical trends, funds, bonds, sustainable investments, equities, etc. Given the influence that equity analysts have on what is happening in the financial world, this group will be focused on in the following.

As an intermediary between companies and investors, equity analysts play a central role in daily capital market activities (Whitehouse, 2017a). Their main task is to interpret the available information about a company correctly and to anticipate the future course of business, but also to prepare investment decisions for IPOs or capital increases. In addition, equity analysts evaluate whether it is worthwhile to invest in a company’s securities or not and then they make corresponding recommendations. It is undisputed that these reports, assessments, and recommendations can have a major influence on what is happening on the financial markets and cause turmoil on the stock markets (Palmieri, Perrin, & Whitehouse, 2018a, 2018b; Schlienkamp, 2002). According to a survey in financial analysis, journalism, communication management and science, analysts have the greatest influence on stock prices (Loh & Stulz, 2011). Equity analysts must have in-depth knowledge of an industry, as well as the financial and business skills necessary to understand and assess movements and trends in individual sectors and at company level. They usually have a university degree, often in business administration, and almost all of them have additional qualifications, such as Chartered Financial Analyst (CFA) or Certified International Investment Analyst (CIIA). In contrast to well-founded professional training, however, many financial analysts have neglected to train their writing skills. This is all the more remarkable as equity analysts are professional writers, i.e., experts for whom writing is an important and indispensable part of their work.

4.2 Context Range 2: Analyst Team

Equity analysts often work in research teams. Many banks employ sell-side and buy-side analysts in their equity research. Sell-side analysts publish their studies, appear in public, and expose themselves to the media with their recommendations. They are in close contact with the trading department, which offers securities to clients—institutional investors, portfolio managers, and investors. Sell-side analysts support sales activities with their recommendations. In contrast, buy-side analysts advise portfolio managers on the assessment of sectors and individual companies; they only publish within the organisation (CFA-Institute, 2021).

The equity research team, i.e., the teams of sell- and buy-side analysts, works together with various other departments, but not in all areas. “Firewalls” (Faitz, 2000; Khatri, 2015), for example, prevent the exchange of information between the equity team and other departments of a bank, with the aim that the knowledge of confidential data (insider information) does not lead to unauthorised transactions. “Credibility, integrity and professional competence are the capital of financial analysts. Independence is the prerequisite for an objective financial analysis […]” (Bucher, 2016, p. 2).

4.3 Context Range 3: Bank

The equity research teams to which the equity analysts belong are often part of a bank. A bank is a company that offers financial services. These include lending business (lending business), deposit business (deposit business; savings accounts, etc.), asset management and investment advice, payment transactions, securities business (stock exchange trading), issuing business (issuing bonds or shares), and financial analysis. A universal bank is a bank that is active in all the aforementioned areas of financial business. Many banks specialise in individual customer segments and markets, niches or products; in their totality they form the banking sector, which is somewhat different in each country. The following sections provide an overview of the most important bank types because the structure and special features of the sector ultimately also have an impact on the writing situation of stock analysts. With focus on German-speaking Europe, the catalogue presented here comprises global banks (4.4.3.1), national banks (4.4.3.2), banking associations (4.4.3.3), universal banks (4.4.3.4), private banks (4.4.3.5), regional banks and savings banks (4.4.3.6), Raiffeisen banks (4.4.3.7), foreign banks (4.4.3.8), and, as a special Swiss feature, cantonal banks (4.4.3.9).

4.3.1 Global Banks

Global banks influence the financial markets around the world. Most often, global banks are universal banks (Sect. 4.4.3.4) with a broad business portfolio. Since the business of such large international players also has an impact on the worldwide economy, the Financial Stability Board (FSB) has been established. In consultation with the Basel Committee on Banking Supervision (BCBS) and governments, the Financial Stability Board has drawn up a policy paper on dealing with systemically important banks (Financial Stability Board, 2020a). The Financial Stability Board is based at the Bank for International Settlements (BIS) in Basel, Switzerland, and has the following mission:

“The FSB promotes international financial stability; it does so by coordinating national financial authorities and international standard-setting bodies as they work towards developing strong regulatory, supervisory and other financial sector policies. It fosters a level playing field by encouraging coherent implementation of these policies across sectors and jurisdictions. The FSB, working through its members, seeks to strengthen financial systems and increase the stability of international financial markets. The policies developed in the pursuit of this agenda are implemented by jurisdictions and national authorities” (Financial-Stability-Board, 2020b).

The list of system-relevant banks as defined by the Financial Stability Board contains 30 banks (Financial-Stability-Board, 2020a). Thereby, assets are not the only criteria for system-relevant banks: crucial is the role of a bank within the financial world and how its bankruptcy would impact the markets worldwide.

4.3.2 National Banks

National banks are the central banks of a country. Their core tasks include ensuring price stability and financial market stability, implementing monetary policy, ensuring the supply of cash and cashless payments, managing currency reserves and compiling statistics on the domestic financial centre. The mission of the national banks is to conduct the country’s monetary policy. While the Deutsche Bundesbank (DBB) and the Oesterreichische Nationalbank (OeNB) are part of the Euro system in which they, together with the other European national central banks and the European Central Bank (ECB), are responsible for the Euro as the single currency, the Swiss National Bank (SNB) is comparatively independent in its decisions. The Principality of Liechtenstein has a special feature in that the Swiss franc was declared the official means of payment under the 1980 Currency Treaty. In addition, the SNB acts as the national bank in the Principality of Liechtenstein, which means that certain financial intermediaries such as banks or investment institutions must comply with reporting obligations to the SNB (Finanzmarktaufsicht-Liechtenstein, 2021).

If a National Bank takes a decision on monetary policy—such as the abolition of the minimum exchange rate of the Swiss franc against the euro in January 2015—this has an impact on the calculation models of financial analysts. For example, they must subsequently examine the impact of this SNB step on all the companies they cover with their research.

4.3.3 Banking Associations

The main objective of the banking associations is to create, maintain, and promote optimal framework conditions at home and abroad for the domestic financial centre. They represent the interests of the banks towards the authorities, maintain the image of the financial centre, are involved in the regulation of the banking sector, promote exchange among the affiliated banks and advise their member organisations. More than 200 private banks (major banks, private bankers, regional banks and foreign banks) and 11 member associations are affiliated to the German Banking Association (Deutscher-Bankenverband, 2021). The Association of Austrian Banks and Bankers comprises around 90 members, including representative offices and institutions under the freedom to provide services (Verband-österreichischer-Banken-und-Bankiers, 2021). The Liechtenstein Bankers Association has 14 member banks, the Swiss Bankers Association has around 350 member institutions and 17,600 individual members (Schweizerische Bankiervereinigung, 2021).

The activities and regulations of the banking associations have an impact on the employees of the member banks. For example, the “Guidelines for Ensuring the Independence of Financial Analysis” issued by the Swiss Bankers Association in 2018 influences the daily work of financial analysts (Swiss Banking, 2018).

4.3.4 Universal Banks

Universal banks offer the whole range of financial services in contrast, for example, to digital banks that often offer simple money transactions (Satariano, 2018). Universal banks are characterised by their strong international orientation and interdependence. In the financial crisis of 2008/2009, some major banks had to be massively supported by the state, such as the German Commerzbank, and the Austrian Kommunalkredit Austria AG, but also British tax payers had to bail out some of their banks. A bankruptcy of major banks would have devastating effects on the respective financial centre and on the global financial markets in general—they are too big to fail. In March 2023, for example, the Swiss Confederation, the Swiss National Bank and the Union Bank of Switzerland (UBS) stepped in to avert the threat of Credit Suisse (CS) going bancrupt, which would have caused serious economic consequences for the global financial markets. 

The writing situation of a financial analyst of a major international bank, who has many interfaces within the organisation and with the foreign business of his or her bank and works in a large team of highly specialised analysts, differs markedly from the structure in which an analyst finds himself or herself with a small private bank, a regional or savings bank, in which only a few analysts cover many areas and the research is sometimes even purchased for cost reasons (see, e.g., Sect. 4.4.3.7).

4.3.5 Private Banks

The history of private bankers goes back to the fifteenth century, when the first bank institutes were opened on the occasion of the Basel Council. Until preindustrial and early industrialisation, private bankers were very important and influential key players in the banking sector. While the first credit institutions in the form of joint-stock companies emerged with industrialisation and their number grew steadily, more and more private bankers disappeared. As a result of this development, the size of the remaining private banks increased steadily. In the 1930s and after 1945, private bankers intensified their activities in the stock exchange and securities business. Over the past 20 years, the assets managed by private bankers have increased sharply, and various private bankers have also expanded their activities abroad (Bundesverband-deutscher-Banken, 2021; Vereinigung-Schweizerischer-Privatbankiers, 2021).

4.3.6 Regional Banks and Savings Banks

This banking group focuses on traditional interest-rate business, i.e., lending business (mortgage and corporate loans) and deposit business (savings and investment accounts). Regional banks and savings banks have a regional focus and are therefore well acquainted with local conditions. Its strength lies in its proximity to its customers. In order to improve the cost structure and exploit synergies in various areas, many regional banks and savings banks work together while remaining independent institutions. One example of such solidarity is the RBA Group, which comprises around 40 regional banks and savings banks in Switzerland (RBA-Holding, 2021).

4.3.7 Raiffeisen Banks

Like the regional banks and savings banks, the Raiffeisen banks concentrate primarily on traditional interest-rate business and have a local presence in particular. Raiffeisen banks are the only banking group to be organised as cooperatives and are represented in various European countries—Germany, Switzerland, Italy, the Netherlands, Austria, Albania, and Kosovo. In Switzerland, more than 320 independent and locally anchored Raiffeisen banks have joined together to form the cooperative “Raiffeisen Switzerland.” Raiffeisen Switzerland is responsible for the strategic management, refinancing, and risk management of the entire Raiffeisen Group, but also coordinates the Group’s activities and advises and supports the local Raiffeisen banks (Raiffeisenbanken-Schweiz, 2021). In Germany, in the middle of the nineteenth century, Hermann Schulze-Delitzsch and Friedrich-Wilhelm Raiffeisen laid the foundation stone for today’s Genossenschaftliche FinanzGruppe Volksbanken Raiffeisenbanken: under its umbrella are around 1100 independent Volksbanken Raiffeisenbanken with more than 13′300 business outlets (Volksbanken Raiffeisenbanken, 2021). The Austrian Raiffeisen Banking Group consists of about 470 independent Raiffeisen Banks with a comprehensive range of bancassurance services (Raiffeisen-Oesterreich, 2021).

Larger Raiffeisen banks have their own research departments that analyse markets and companies and publish corresponding publications. The customers of smaller Raiffeisen banks, on the other hand, are provided with financial analysts’ texts that are purchased from other, larger banks and labelled as such. One example is Raiffeisenbank Mittelrheintal that obtains its equity research from Bank Vontobel (Raiffeisenbank Mittelrheintal, 2017). Usually these texts are adopted unchanged, if necessary the logo is adapted (rebranding). For financial analysts of larger financial institutions who sell their research to various other banks, this means that they write for customer segments they do not know. For the organisations acquiring research, this means that the texts purchased are not tailored-made for their addressees and customer groups.

4.3.8 Foreign Banks

Foreign banks are branches of banking institutions which are domiciled abroad or of which the majority is in foreign hands. While foreign-controlled banks are independent legal entities, the branches of foreign banks are legally and commercially under the control of the parent institution. In 1972, all foreign-controlled banks and branches of foreign banks merged to form the Association of Foreign Banks in Switzerland (AFBS). There are currently around 120 foreign banking institutions and 30 branches of foreign banks in Switzerland (Foreign-banks-in-Switzerland, 2021). The Association of Foreign Banks in Germany was founded in 1982 and represents the interests of over 200 foreign banks, investment companies, financial services companies, and representative offices in Germany. In Germany, around 30,000 people are employed in the foreign financial industry (Verband-der-Auslandsbanken-in-Deutschland-e.V., 2021). Foreign banks have around 50 branches in Austria, and there are a few foreign banks in Liechtenstein (as of 2021).

Larger and above all international banks also have financial analysis departments in their foreign branches. This enables local analysis of local markets. For financial analysts, this means writing in a cultural context that does not correspond to the environment of the parent institution. At the same time, however, they must comply with the requirements and guidelines of the parent institution.

4.3.9 Cantonal Banks

The 24 existing cantonal banks are a special feature of the Swiss financial centre. Banks with a legal basis in cantonal law and a participation of the respective canton of more than one-third of the capital and votes are considered cantonal banks. The state guarantee as a constituent feature was abolished with the revision of the Swiss Banking Act in 1999; in Germany, taxpayers no longer have to pay for the obligations of public banks since mid-2005. The cantonal banks operate primarily in their home cantons, where many of them are market leaders. About 30% of banking business in Switzerland is conducted by the cantonal banks.

With the advancing industrialisation of the Swiss economy, demand for credit increased in the second half of the nineteenth century. Since the credit institutions existing at that time—today’s major banks—financed in particular trade, industry, and the expansion of the railway, there were only a few financing possibilities available for crafts and agriculture. The Cantonal Banks, which were then founded in various cantons, entered the breach by offering banking services, such as low-interest (mortgage) loans and secure investment opportunities, to broad sections of the population. Over time, the range of services and products was greatly expanded. While the smaller cantonal banks today are mainly active in the savings and mortgage business, the larger cantonal banks can be described as universal banks. Since 1907, the cantonal banks have been united in the Association of Swiss Cantonal Banks (VSKB), which safeguards the interests of the cantonal banks and strengthens their position in Switzerland (Verband-Schweizerischer-Kantonalbanken, 2021).

The Cantonal Banks vary greatly in terms of their balance sheet total, business volume and number of employees. The Zürcher Kantonalbank is the largest cantonal bank and at the same time one of the largest banks in Switzerland. In 2013, it was classified by the Swiss National Bank as “too big to fail” (see above, Sect. 4.4.3.1).

Not every cantonal bank has a research department. Rather, various cantonal banks obtain their research from other, larger cantonal banks or from third parties and pass it on to their customers—depending on the contract with their own logo or with the logo of the research provider. A financial analyst who, for example, works for a global bank that sells its research to cantonal banks, writes the same text for internationally oriented investors, on the one hand, but also for investors with a local focus, on the other. Since the target group readers are so different, it is almost impossible to meet the interests of all.

4.4 Context Range 4: Financial Community

Together with financial journalists, investors, and rating agencies, the financial analysts of all banks and brokers form the financial community (Fig. 4.2, blue frame). Communication between a company and the financial community via investor relations (IR) and public relations (PR) channels is referred to as financial communication (Bommer, 2006; Léger, 2008). It should be mentioned here that other, less differentiated approaches equate the term financial communication with investor relations (e.g., Kirchhoff & Piwinger, 2009). It also happens that financial communication is used synonymously with financial market communication, although this is limited to the company’s communication with the players in the financial market and is exclusively a matter for the investor relations (Bommer, 2006, p. 106).

Fig. 4.2

Following Wolff [2000]

Information flow financial community

The participants in financial communication influence each other and are also dependent on each other (Fig. 4.2, arrows). In the following, companies (4.4.4.1), financial journalists (4.4.4.2), investors (4.4.4.3), and rating agencies (4.4.4.4) are discussed in more detail.

4.4.1 Companies

Companies can finance themselves in various ways. Raising equity by issuing shares is cheaper than financing through interest-bearing capital market instruments (e.g., bonds). In order to find potential shareholders for their securities, companies must be attractive regarding their earnings and convincing regarding their investment story. Companies in general and listed companies in particular are, therefore, interested in informing financial analysts, the media, and investors about company events in accordance with the company’s ideas. A company that informs only very sparsely risks that the financial community speculates (negatively) about the course of business. This, in turn, can have an undesirable effect on the share price (Peppmaier, 2000, p. 81, 147).

Companies inform the financial community via various channels, media, communicative genres, and text types. The most common are annual reports, interim reports, newsletters, shareholder meetings, press conferences, and analyst events. Analysts play an important role everywhere (Repke, 2007). Companies organise regular meetings, especially for financial analysts, often involving management, especially the Chief Financial Officer (CFO), but also the Chief Executive Officer (CEO). Contact with financial analysts serves to provide an impression of current and expected business developments (Whitehouse, 2017a, 2017b). If, for example, they are in open dialogue with a company, more precise assessments are possible than if a company only provides key figures. This makes direct contact with the company all the more important for the financial analysts; the analysts must investigate and verify any information that might be relevant for the course of business and thus for the share price. In short: “analysts have an interest in preserving their ongoing relationship with the managers of the companies they follow” (Palmieri et al., 2015, p. 130).

One of the differences between the work of financial analysts and that of journalists is that this research is always comprehensive. Analysts have to deal with the most remote aspects, but also the most abstruse rumours, and develop appropriate scenarios. Journalists do not have to do this (Dougal et al., 2011).

4.4.2 Financial Journalists

“In market economies the role of the news media can be seen in connection with the circulation of information in the markets. This function is particularly highlighted in the case of the financial markets […]” (Andone & Rocci, 2016b, p. 4). Financial journalists base their work largely on the same sources of information as financial analysts, and for the most part they write for the same addressees. However, while journalists strive to reproduce facts, describe, classify, and comment on them, analysts aim to give investors a concrete investment recommendation (Döring, 2000; Whitehouse, 2017a). The figures and recommendations prepared by analysts often find their way into the texts and reports of journalists, who increasingly replace or supplement their own assessments with the comments of analysts—analysts’ judgements are now standard in financial reporting (Dougal et al., 2011; Reckinger & Wolff, 2011). “[…] journalists rarely take the responsibility of a predictive or practical standpoint. They dilute their stance through modalisation and construct their case by reporting, expounding and interpreting the views and arguments of experts […]” (Andone & Rocci, 2016b, p. 5).

There are three reasons why analysts are increasingly being asked by the media for quotable comments, written statements, interviews, or television appearances: firstly, analysts deal much more intensively with a company than journalists (Blohm, 2000; Tetlock, 2007) and therefore have a considerably greater knowledge of individual companies, which is particularly in demand if a company is in an exceptional situation (e.g., Transocean²) or crisis (e.g., Petroplus³) or is involved in a scandal. As a journalist puts it:

“Als Journalist tuen ich ja nöd nur Service, sondern ich verzell au Gschichte. Und zum die Gschichte verzelle, sind die natürlich super, will die kenned x Gschichte.”

(Original in Swiss German, translation Marlies Whitehouse: “The financial experts have a large repertoire of stories. As a journalist, I not only offer information service, […] after all, I am telling a story. And of course, the analysts know many stories—and are therefore a great place to get stories.” inter_G_FJS_1).

Secondly, although many journalists with an economics education work in economic journalism or as financial journalists, they do not have additional qualifications such as financial analysts (e.g., Chartered Financial Analyst CFA training; Sect. 4.4.1).

“Genau, also oft ischs ja so chli, ähm, oft isch ja Mängel an eigene Fähigkeite, aber au, mer will e Breiti zeige oder suggeriere zumindest. […] Also amigs hani, also wenns um, wenns denn chli technischer wird und di ganze technische Analyse, denn muessi scho saage, denn stiige nit.”

(Original in Swiss German, translation Marlies Whitehouse: “Exactly, often it is, hum, a lack of abilities, but also that one wants to show or at least give an impression of breadth […] I’m happy to receive analyst reports. If it gets a little bit more technical and it’s all about technical analysis, I have to say, I don’t understand it.” inter_G_FJS_11).

Thirdly, given the fall in article prices, financial journalists often no longer have time for thorough research because they have to produce more texts for less money at the same time (Döring, 2000; Alexander V. Laskin & Samoilenkob, 2014). The result is that they sometimes rewrite their source text instead of writing the story themselves:

“Will i de Regel, wenn ich öppis useme Bricht nimm, dänn tuen ichs zum Teil paraphrasiere.”

(Original in Swiss German, translation Marlies Whitehouse: “When I take something out of a report, I paraphrase it partially.” inter_G_FJS_12).

Financial journalists and financial analysts also share common ground regarding language awareness, comprehensibility, and financial literacy. When I asked J6: “What financial literacy do you expect the reader of your articles to have?” (Sect. 4.3), he answered: “Extrem schwierig, ich finds extrem schwierig. Äh, aber eigentlich sött mer die Frag chönne beantworte. […] Sehr wahrschindli, ja, hät mer scho die Deformation professionelle, wenn mer de ganz Tag sich mit dem Züüg beschäftigt. Dass mer eifach vill z vill voruus setzt.”

(Original in Swiss German, translation Marlies Whitehouse: “It’s an extremely difficult question to answer, but one that we should be able to answer. […] Most likely we have already a professional deformation, if you spend the whole day with this stuff. We just presuppose too much from the reader.” inter_G_FJS_6).

The exchange and interplay in financial communication and financial community have an impact on the work of financial analysts. If journalists ask more and more financial analysts for their opinion, whether by telephone or as experts in business programmes on television, this also affects the time that financial analysts have left to write their texts (Whitehouse, 2019).

4.4.3 Investors

Investors are persons, companies, institutions, or the like who invest capital. In contrast to speculators who are willing to take high risks in the hope of above-average profits, investors also want to maximise profits, but minimise risks. They rely on information and forecasts on financial markets and companies provided by other members of the financial community. Financial analysts are important guides in the investment jungle for (potential) investors (Mathes, Kalt, & Hufnagel, 2000), especially when investors’ financial literacy is low (Whitehouse, Palmieri, & Perrin, 2018a, 2018b). Well-founded financial analysts’ texts and recommendations with prepared data can help investors to get a more accurate picture of what is happening on the financial markets—the studies are intended to serve as basic information for an investment decision. But the accuracy and clearness of analysts’ assessments can and must also be questioned (Brown et al., 2015; Hieke, 2000; Jorns, 2009). Especially in so-called bear markets, when stock market prices are falling across a broad front and many investors lose money, investors repeatedly criticise the performance of financial analysts. In short: when investors lose money, they blame the financial analysts.

4.4.4 Rating Agencies

Rating agencies, also known as credit rating agencies, assess the creditworthiness of companies in all sectors as well as of states and their subordinated local authorities that have issued bonds on the capital market (Langohr & Langohr, 2008; White, 2010). Based on standardised procedures and in-depth knowledge of the respective sectors, rating agencies estimate the probability that a debtor will be able to meet its payment obligations. Based on the calculated values, the debtors are divided into creditworthiness categories and assigned a rating, whereby a distinction is made between short-term and long-term ratings. A rating consists of three components:

• 1. letters A, B, C, D. At the top of the scale is AAA or Aaa as the best rating indicating that the debtor is very likely to meet its obligations. At the lower end of the scale is D for non-performing (default), which means that the debtor is unlikely to be able to pay interest and principal.

• 2. signs (+ or −) or numbers (1, 2, 3) are used as fine differentiation. A rating of AA + indicates that the creditworthiness of the company must be rated between AA and AAA.

• 3. the outlook assessment indicates the direction in which the credit rating will change: stable, neutral, negative. A rating that is marked with “negative” outlook will most likely be downgraded by the rating agency at the next reclassification.

Companies are interested in having a rating: when they issue a bond, bondholders want to know what the risks are of their investment (Nix, 2009). Because an issuer without a rating has comparatively worse chances of finding buyers for its securities, the companies publish their ratings. A good rating also makes it possible to finance oneself more cheaply on the capital market, because the better the creditworthiness of a company, the less the investors have to be compensated for possible default risks. Conversely, an issuer with a very low rating must make comparatively high interest payments to investors who want to be compensated for their risk. If a rating agency lowers the rating for an issuer, this also means immediately higher refinancing costs, which in turn puts even greater pressure on the financial situation of the bond debtor.

In order to obtain a credit rating, a capital market debtor must be rated by a credit rating agency; this service is invoiced. The currently largest and market-leading rating agencies are Standard & Poor’s, Moody’s, and Fitch Ratings. Precisely because these valuations are expensive, the financial market crisis in particular has led to criticism of the rating agencies, whose core business is to anticipate payment defaults. However, they, too, were unable to foresee the impending financial market crises in 2007/2008 and 2023 and adjust their valuations accordingly in advance.

4.5 Context Range 5: Financial World

The financial world is characterised by rapid changes and reacts very sensitively to news, events and information. There is almost nothing that does not affect the financial industry in any way (Palmieri et al., 2018a, 2018b; Whitehouse et al., 2018a, 2018b). If, for example, a natural catastrophe occurs, the shares of the insurance companies start to move, or if the unemployment figures rise, this can weigh on the securities prices of the automobile industry.

There is a constant debate about which market participants have how much influence. Especially during and after the financial crisis in 2007/2008, this was the subject of many discussions in various areas. In view of the connections and mutual influence of the media, companies, investors, and analysts, studies on the work and influence of financial analysts are also carried out time and again. The results show that analysts with their decisions and communication can demonstrably influence not only individual prices, but entire markets (Bloomberg, 2013; CFA-Institute, 2021; Loh & Stulz, 2011).

In the financial sector, and especially in the banking sector, the rules of fair trade apply in principle. Ultimately, trade functions only on the basis of credibility, but also on the basis of the trust of all parties involved. Since financial analysts have a proven track record of strong influence, they are subject to requirements and guidelines. For example, financial analysts are often not allowed to hold securities of the companies they cover with their research, and trading departments only receive an analyst study when it is sent to investors, companies and the media; this ensures that all market participants have the same information at the same time. Among other things, the firewalls mentioned above (Sect. 4.4.2) are intended to ensure that no price-sensitive, confidential company information flows within the banks.

Despite all these precautions and guidelines in the entire sector, however, scandals are repeatedly publicised that point to security gaps that have not yet been closed. Ultimately, financial business remains a business based on trust.

5 Interim Conclusion

The financial world proves to be a complex interplay of agents with manifold interests, expectations, and interdependencies. In this environment of domain-specific opportunities and constraints, financial analysts are embedded in a layered system. Five layers of contexts with increasing range have been differentiated: analyst team, the bank, the financial community, and the financial world. In other words, the agents interact in nested context ranges (Sect. 4.4.1):

The analysis of context range 1 (4.4.1), the writing situation of financial analysts, shows that financial analysts are experts in analysing and interpreting economic data and business data of which they derive investment recommendations. By doing so, they are supposed to guide investors safely through the financial jungle, they must deliver a good performance by forecasting the future events on the capital markets and in companies’ businesses, they are subject to many regulations, they need to have a recognised standing among their peers, and, after all, they must not crack under the pressure of the erratic financial markets. In sharp contrast to their expertise in finance, most financial analysts are not trained in writing, even though writing is an important and indispensable part of their work, be it as individual analyst or as a team.

The analysis of context range 2 (4.4.2), the analyst team, explains that financial analysts are part of a team that covers a certain industry, e.g., the pharmaceutical industry, and that these teams have different task, e.g., as sell-side or buy-side analysts. The analyst teams work together with other business units in the bank. In doing so, they need to follow various regulations to prevent, e.g., front running, which in stock exchange trading refers to the use of confidential knowledge of the client’s trading strategy (prior to the execution of the commissioned securities order) by the representative of the executing institution for his or her own benefit. These guidelines and regulations help ensure fairness in the financial markets, but also protect the reputation of the financial analysts’ employers, mostly banks.

The analysis of context range 3 (4.4.3), the bank, shows the different types of banks, their functions, and systemic relevance. Whereas global banks influence the international financial markets on a business level, national banks regulate the framework in which banks operate in their domicile. Universal banks offer the whole range of banking products and have a broad customer base: it spans from people whose account is constantly below zero to ultra-high-net-worth individuals. Especially global and universal banks have large financial analyst teams. Their text products are partially recycled and rebranded by private banks, as well as by Raiffeisen banks, cantonal banks, and regional and savings banks that focus on mortgage business. This recycling is a lucrative deal for the banks and part of the flow of information within the financial community.

The analysis of context range 4 (4.4.4), the financial community, explains the flow of information between the stakeholders. Companies communicate with the financial community—consisting of financial analysts, financial journalists, rating agencies, and investors (Fig. 4.2)—over the channels of investor relations and public relations, e.g., to publish the annual profit. While the goal of companies is to attract and keep investors, the financial community’s aim is to assess the companies’ information and to find the most lucrative investment opportunity for the present and the future. With the aid of sophisticated calculation models, possible future scenarios are developed and described in the financial text products and investment recommendations which are sent out into the financial world.

The analysis of context range 5 (4.4.5), the financial world, shows that almost every event has an impact on the financial markets: in case of a pandemic, for example, any news on the development of a new vaccine or medication can boost the share price of the corresponding pharmaceutical company. At the same time, any comment or rumour, justified or not, can cause turmoil in the financial markets. The words buy, hold, and sell uttered by a financial analyst have the power to cause big shifts in the markets which can lead to huge losses or profits for the stakeholders and, ultimately, entire societies. For this very reason, it is indispensable that the financial community, and especially investors with low financial literacy, understand the reasoning behind the financial analysts’ recommendations.

This knowledge of the various context ranges within the financial world is of twofold relevance: from a theoretical perspective, it allows to perceive potential theoretically attractive real-life issues and to further develop existing theories based on empirical insights. From a practical perspective, it enables the stakeholders to develop feasible measures which are suitable and compliant with the professional setting of the practitioners. The ethnography in this study has indicated that such measures have to focus on context and language awareness, cross-domain translation, and the ability to write comprehensively and comprehendably by considering the addressees’ financial literacy in general. However, concrete measures for practitioners need to start from an in-depth knowledge of the actual text products (Chapter 5) and the underlying processes (Chapter 6) in this field of financial analysis.