“Tracking Analysts along the Technological Links” by Dr. Li YAO
Dr. Li YAO
Assistant Professor of Accountancy
John Molson School of Business
Based on patent information among US firms, this paper examines the impact of technological links on analysts’ coverage decisions and earnings forecast performance. We find that the number of analyst coverage and forecast accuracy are positively related to a firm’s aggregate technological links with other firms in the stock market; and that the likelihood of an analyst’s coverage and forecast accuracy increase with a firm’s technological links with other firms the analyst has covered. Our results show the importance of analysts’ technology expertise in their future coverage decisions and forecast performance, and suggest that information spillover along technological links allows analysts to explore informational complementarities across industries.