Pre-grant Patent Disclosure and Analyst Forecast Accuracy

Mehdi Beyhaghi (), Pooyan Khashabi () and Ali Mohammadi ()
Additional contact information
Mehdi Beyhaghi: Federal Reserve Bank of Richmond, Charlotte, North Carolina 28202
Pooyan Khashabi: ESSEC Business School, 95000 Cergy, France
Ali Mohammadi: Copenhagen Business School, 2000 Frederiksberg, Denmark; Danish Finance Institute, 2000 Frederiksberg, Denmark

Management Science, 2023, vol. 69, issue 5, 3140-3155

Abstract: We examine the relationship between pre-grant patent disclosure and analyst forecast accuracy. We take advantage of the passage of the American Inventor’s Protection Act (1999), which mandates the pre-grant public disclosure of all information in patent application documents within 18 months of the initial filings. We find that, on average, the pre-grant patent disclosure of corporate inventions significantly improves the accuracy of analyst forecasts about the patenting firm and this improvement is greater for firms with higher research and development intensity. Nevertheless, improvements in the accuracy of analysts’ forecasts are smaller when firms issue more original and scientifically broader patents. Also, this effect is weaker for firms in states without legal protection for trade secrets.

Keywords: disclosure; analyst forecast; patent; information asymmetry; American Inventor’s Protection Act (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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