Patent Citations and Financial Analysts’ Long-Term Growth Forecasts

Jincheol Bae, Wonchang Hur, Jaehong Lee and Jaimin Goh
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Jincheol Bae: College of Business Administration, Inha University, Incheon 22212, Korea
Wonchang Hur: College of Business Administration, Inha University, Incheon 22212, Korea
Jaehong Lee: College of Business Administration, Sangmyung University, Seoul 03016, Korea
Jaimin Goh: College of Business Administration, Inha University, Incheon 22212, Korea

Sustainability, 2017, vol. 9, issue 5, 1-15

Abstract: This paper examines the influence of patent citations, a proxy for the quality of firms’ innovation outputs, on financial analysts’ long-term growth forecasts for firms. We find that financial analysts are more likely to issue long-term forecasts for firms with higher patent citations. In addition, we find that financial analysts’ long-term forecasts are more positive for firms with high patent citations. These results imply that patent citations increase financial analysts’ coverage, and result in more positive forecasts for firms with impactful patents. Considering that financial analysts play important roles in allocating financial resources in capital markets, our findings suggest that patents are valuable assets for firms in securing capital from capital markets, and are thus essential for the sustainable growth of firms.

Keywords: financial analysts; long-term growth forecasts; patent citations; capital markets (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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