We examine the influence of sell-side equity analyst coverage on the market value of corporate innovation. We follow prior studies that have primarily focused on the scientific value of innovation, as measured by patent citations, but we also use a market-based measure of patents’ market values. Using a broad sample of U.S. firms from 1990-2020, we provide evidence that firms with higher analyst coverage tend to realize higher market values for their approved patents. Our results are robust to the inclusion of firm-fixed effects, 2SLS analysis, and a difference-indifference analysis of exogenous shocks to analyst coverage. In cross-sectional analysis, we find that the results are most consistent for industries in which intellectual property is more complex, highlighting the importance of analysts’ scientific education and expertise.
| Speaker: | Dr Michael Jung Associate Professor, University of Delaware |
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