Institutional site visits and corporate innovation: The role of analyst coverage

Shiqi Weng, Zhao Rong and Li Yu

Pacific-Basin Finance Journal, 2024, vol. 85, issue C

Abstract: By exploring additional information, both institutional investors' site visits and analyst coverage can stimulate corporate innovation. However, because analysts are more specialized in information exploration, their existence should weaken the effect of institutional site visits on corporate innovation. Using Chinese listed firms from 2009 to 2013, we investigate the effect of institutional site visits on firms' innovation output, with a focus on its heterogeneity from analyst coverage. We use patent citation records to accurately measure firms' innovation output. We find that institutional site visits significantly enhance corporate innovation among firms without analyst coverage, among firms with low analyst coverage, while this effect turns insignificant among firms with high analyst coverage. IV estimations confirm the causality. Additionally, we find that our major results exist only among non-SOEs, firms with a lower quality of information disclosure, firms with lower liquidity, and newly listed firms. Overall, this paper helps better understand the interaction between institutional site visits and analyst coverage regarding information exploration.

Keywords: Site visits; Institutional investor; Corporate innovation; Analyst coverage; Information exploration (search for similar items in EconPapers)
JEL-codes: D82 G20 G34 O31 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:85:y:2024:i:c:s0927538x24001057

DOI: 10.1016/j.pacfin.2024.102354

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