Tuesday, June 2, 2009 5:21 PM
CFA exams are worth the pain!
Andrew Willis
Here’s an uplifting message for the 15,100 Canadians doing their final cramming for Saturday’s CFA exam : It’s worth it.
Two academics, one at the University of Toronto’s Rotman School of Management, crunched the numbers on sell-side analysts who have the designation, comparing their performance to those who haven’t got a CFA.
The good news: Doing the CFA makes you a better analyst.
What candidates don’t want to hear is that the two professors concluded that “while [CFA] charterholders perform at statistically significant higher levels than non-charterholders in some tests, the economic significance of these differences is questionable.”
What exactly is the difference between those analysts who have CFA on their business card, and those who don’t?
Rotman professor Gus De Franco and Yibin Zhou and The University of Texas found that CFA holders “issue forecasts that are timelier than those of non-charterholders.” They attribubted this diligence in getting quaility work out in front of clients, quickly, in part to the discipline that comes from passing the three CFA exams.
The pair also found evidences of what they called “credentialism,” the idea that a professional’s educational credentials “provide a signal about the professional’s quality to his or her clients.” The study found market reaction to recommendations on smaller firms “is stronger for charterholders than non-charterholders after controlling for timeliness, boldness, accuracy, and optimism.”
“I think the results are in line with expectations,” said Mr. De Franco, an accounting professor. “The results prove that there’s value in the CFA charter and people who are taking the CFA program are being rewarded, at least in part.”
Despite the downturn, or because of it, 128,600 candidates around the world will take this weekend’s CFA exam, up 14 per cent from last year. Canadian participation is up 8 per cent compared with last June.
