Does Analyst Coverage Promote or Impede Corporate Innovation: Evidence from an Emerging Market
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How analyst coverage impacts firms’ innovation remains unknown ex ante. Information hypothesis predicts the positive direction while and performance pressure hypothesis predicts the negative direction. In this paper, we examine this question in the context of China. Our baseline result shows that companies covered by abundant analysts generate more innovation. We validate the robustness of the result in an instrumental regression design. This study sheds light on the determinant of innovation in emerging market.
Innovation; analyst covereage; China; emerging market