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Patent Citations and Financial Analysts’ Long-Term Growth Forecasts

Author

Listed:
  • 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)

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.

Suggested Citation

  • Jincheol Bae & Wonchang Hur & Jaehong Lee & Jaimin Goh, 2017. "Patent Citations and Financial Analysts’ Long-Term Growth Forecasts," Sustainability, MDPI, vol. 9(5), pages 1-15, May.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:5:p:846-:d:99114
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    References listed on IDEAS

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    1. Kyoungwon Mo & Kyung Yun (Kailey) Lee, 2019. "Analyst Following, Group Affiliation, and Labor Investment Efficiency: Evidence from Korea," Sustainability, MDPI, vol. 11(11), pages 1-19, June.
    2. Papazoglou, Michalis E. & Spanos, Yiannis E., 2021. "“Influential knowledge and financial performance: The role of time and rivals’ absorptive capacity”," Technovation, Elsevier, vol. 102(C).

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