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Analyst coverage of innovative firms and patent market values

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  • He, Jing
  • Jung, Michael J.
  • Zhang, Xiaodi

Abstract

We investigate the influence of sell-side equity analyst coverage on corporate innovation from a market value perspective. While prior studies show that analyst coverage may impede firms' scientific output, as measured by fewer patents and citations, we use a more comprehensive sample over an extended period to provide evidence that analyst coverage is positively associated with patent market values. The positive association is robust to a battery of regression specifications and research designs to address endogeneity. We explore the underlying mechanisms and identify reduced information asymmetry by analysts, rather than increased monitoring, as the key driver of the positive association. Additional tests suggest that more published analyst reports, more reports authored by analysts with scientific education, and more reports that contain patent-related keywords are associated with higher patent market values.

Suggested Citation

  • He, Jing & Jung, Michael J. & Zhang, Xiaodi, 2026. "Analyst coverage of innovative firms and patent market values," Journal of Corporate Finance, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:corfin:v:98:y:2026:i:c:s0929119926000155
    DOI: 10.1016/j.jcorpfin.2026.102957
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