Business Commons^™

Analysts' Site Visits And Corporate Innovation, Qiang Cheng, Yutao Wang, Holly I. Yang, Zheyuan Zhang

Research Collection School Of Accountancy

While prior studies examine whether analyst coverage affects corporate innovation, there is little research on the mechanism through which financial analysts affect corporate innovation. In this paper, we examine whether and how analysts’ questions about innovation affect corporate innovation activities and outcomes. Using a sample of corporate site visits in China, we find that when analysts ask questions about innovation during site visits, the firms invest more in research and development and file more patent applications in the future. This association is stronger when analysts have a greater information and monitoring role. In addition, consistent with knowledge diffusion between firms, …