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Do Analysts Fully Reflect Information in Patents about Future Earnings?

1
College of Business Administration, Inha University, Incheon 22212, Korea
2
College of Business, Sangmyung University, Seoul 03016, Korea
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Author to whom correspondence should be addressed.
Sustainability 2019, 11(10), 2869; https://doi.org/10.3390/su11102869
Received: 8 April 2019 / Revised: 7 May 2019 / Accepted: 14 May 2019 / Published: 20 May 2019
(This article belongs to the Section Economic and Business Aspects of Sustainability)
This study investigates the relationship between a firm’s intellectual property (measured by patents) and its future business performance and information environments by focusing on financial analysts’ forecasting behavior. The results show that patent citations have more influence on future profitability than patent counts and financial analysts pay more attention to firms with patent citations by showing higher followings for those firms. However, the findings also suggest that analyst forecasts do not fully reflect the implications of the effect of patent citations on future earnings and this under-valuation can mislead investors. Thus, we conclude that financial analysts ‘partially’ improve the information environment in terms of patent citations. View Full-Text
Keywords: patent citations; patent counts; business performance; analyst followings; analysts’ forecasting activities patent citations; patent counts; business performance; analyst followings; analysts’ forecasting activities
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MDPI and ACS Style

Goh, J.; Lee, J.; Hur, W.; Ju, Y. Do Analysts Fully Reflect Information in Patents about Future Earnings? Sustainability 2019, 11, 2869. https://doi.org/10.3390/su11102869

AMA Style

Goh J, Lee J, Hur W, Ju Y. Do Analysts Fully Reflect Information in Patents about Future Earnings? Sustainability. 2019; 11(10):2869. https://doi.org/10.3390/su11102869

Chicago/Turabian Style

Goh, Jaimin, Jaehong Lee, Wonchang Hur, and Yunchang Ju. 2019. "Do Analysts Fully Reflect Information in Patents about Future Earnings?" Sustainability 11, no. 10: 2869. https://doi.org/10.3390/su11102869

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