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The contingent effect of analyst coverage: how does analyst coverage affect innovation and Tobin’s Q?

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  • Sung Hwan Jung

Abstract

This study hypothesizes that the relationship between analyst coverage and innovation (Tobin’s Q) is U-shaped. My results support this hypothesis. Specifically, I find that as a firm’s analyst coverage increases, innovation (Tobin’s Q) declines at first, reaching a low point at moderate levels of analyst coverage, and increase thereafter. These findings suggest that firms can transform its investments in the relationship with the analyst community into firm performance only after they make substantial investments in the relationship.

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  • Sung Hwan Jung, 2017. "The contingent effect of analyst coverage: how does analyst coverage affect innovation and Tobin’s Q?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(1-2), pages 43-67, April.
    • Handle: RePEc:taf:raaexx:v:24:y:2017:i:1-2:p:43-67
    DOI: 10.1080/16081625.2016.1174070
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