Purpose – This study measures how competitive securities broker-dealers are in the Korean financial markets. It aims to test whether the markets are perfectly competitive or monopolistic since the global financial crisis of 2008. Research design, data, and methodology – We apply the method developed by Panzar and Rosse (1987), H-statistics, which offers an index for the competitiveness as well as statistical tests. The dataset in use is retrieved mainly from the quarterly statements of the financial services companies by the Financial Statistics Information System of the Financial Supervisory Service. General information on officers and employees is utilized in addition to balance sheets and income statements of securities companies. Results – H-statistics for 2009-2015 is about 0.7 that is a robust estimate regardless of model specifications such as full trans-log, partial trans-log, and Cobb-Douglas regression equations. H-statistics for each year is also computed in similar ways in that it varies between 0.3 and 0.9. Conclusions – Since the global financial crisis, H-statistics concludes that securities broker-dealer markets in Korea is neither perfectly competitive nor monopolistic. It evidences that the markets are rather monopolistically competitive. The trend in annual H-statistics leads to the same conclusion but the result is not such stable that overall H-statistics implies.

This paper attempts to measure the impact of non-financial factors including analyst practices and broker resources on performance of sell side research. Results reveal that these non-financial factors have a measurable impact on performance of target price forecasts. Number of pages written by an analyst (surrogate for analyst practice) is significantly and directly linked with target price accuracy indicating a more elaborate analyst produces better target price forecasts. Analyst compensation (surrogate for broker resource) is significantly and inversely linked with target price accuracy. Out performance by analysts working with lower paying firms is possibly associated with motivation to migrate to higher paying broking firms. The study finds that employing more number of analysts per research report has no significant impact on target price accuracy –negative coefficient indicates that team work may not result in better target price forecasts. Though insignificant, long term forecast horizon negatively affects target price accuracy while stock volatility improves target price accuracy.