Equity Research in the 90s

Before 2000, the golden days of research were fueled by 3 things...

1. Growth and value of active management: AUM's were growing and active management was receiving fund inflows. People weren't really questioning active vs passive like we do today and there wasn't crowding in trades or quants to worry about so active equities were an ideal place to be.
2. Reg FD: Reg FD was instituted in 2000 which requires fair disclosure of all material news by companies. Before then, equity analysts could receive important information exclusively which made them enormously valuable to the buy-side.
3. Chinese wall: Nowadays, compliance has a hawk eye on interactions between banking and research. Before, clients would often do banking business with the firm that they knew would give a favorable research report. The business used to go hand-in-hand and research used to be compensated for their role in bringing in banking. This is not the case anymore.

Today, all 3 aspects above are negative for the industry. Active management is in contraction, all information must be openly and fairly distributed, and research must be independent from banking.