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Pre-grant Patent Disclosure and Analyst Forecast Accuracy

Author

Listed:
  • 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)

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.

Suggested Citation

  • Mehdi Beyhaghi & Pooyan Khashabi & Ali Mohammadi, 2023. "Pre-grant Patent Disclosure and Analyst Forecast Accuracy," Management Science, INFORMS, vol. 69(5), pages 3140-3155, May.
    • Handle: RePEc:inm:ormnsc:v:69:y:2023:i:5:p:3140-3155
    DOI: 10.1287/mnsc.2022.4420
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    Cited by:

    1. Liu, Baohua & Huang, Dan & Chen, Tao & Chan, Kam C., 2023. "Mandatory R&D disclosure and analyst forecast Accuracy: Evidence from an emerging market," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(3).

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