Should Equity Research be cited in Corporate Marketing Messages?

Last week UPS was forced to stop running a television ad that claimed it had been “ranked the most reliable” package-shipping company.  The source of the ranking referenced by UPS was a study conducted by Morgan Stanley in November of 2008.  Morgan updated its Parcel Return Survey in April, which resulted in FedEx receiving the top ranking.

What I find interesting is not whether FedEx or UPS were ranked higher, but that the source of the data is an equity research report from an investment banking firm.   UPS is not the only company using this technique.  For several years DirecTV has been claiming that it has the most broadband channels of any satellite or cable provider in the US on its television advertisements.  However, if you look closely at the fine print during the TV ad you will note that the source of the claim is an equity research firm.


Is a financial analyst really a credible source for ranking and comparing the various companies in an industry segment?   I have no doubt that financial analysts perform extensive research and have keen insights into market dynamics.  But do they have a truly unbiased viewpoint?  Financial analysts were heavily criticized following the Dot Com bust earlier this decade for issuing misleading reports that promoted companies they provided investment banking services for.  I wonder if Morgan Stanley is a market maker for FedEx or UPS.  Wouldn’t such a relationship provide an inappropriate influence over the ranking of firms in a particular market segment?  If equity research is going to be cited by corporate marketing organizations then perhaps full disclosure of any investment banking relationships with the analyst firm is appropriate.

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