Do Analysts Fully Reflect Information in Patents about Future Earnings?
Abstract
:1. Introduction
2. Background and Hypotheses
2.1. Patent Citations and Business Performance
2.2. Patent Citations and the Information Environment
2.3. Analysts’ Forecasting Activities and Patent Citations
3. Research Design and Sample Description
3.1. A Test of Patent Citations and Business Performance
- = Earnings per share in year t + 1;
- = Consensus of analyst forecasts for earnings per share for year issued in year t;
- (EPS consensus − Actual EPS)/Actual EPS;
- Natural log of the patent stock in year t, the total number of patents granted thus far in year t;
- Natural log of the citation stock in year t, the total number of citations that a firm’s patent stock received thus far (year t) from other firms’ patents.
3.2. A Test of Patent Citations and Information Environment
- The number of analysts covering a firm in year t;
- Ln (total assets);
- Total liabilities/Total assets;
- Net income/Total assets;
- (Debt financing + Equity financing)/Total assets.
- See Equation (1) for other variable definitions.
3.3. A Test of Analysts’ Forecasting Activities on Patent Citations
- Consensus of analyst forecasts for EPS for year t + 1 issued in year t + 1.
- See Equation (1) for other variable definitions.
- = Consensus of analyst forecasts for earnings per share for year t + 1 issued in year t;
- Consensus of analyst forecasts for earnings per share for year t + 1 issued in year t + 1;
- Actual earnings per share for year t;
- (EPS consensus − Actual EPS)/Actual EPS;
- Natural log of the patent stock at t, the total number of patents granted thus far, in year t;
- Natural log of the citation stock in year t, the total number of citations of a firm’s patent stock thus far (year t) from other firms’ patents.
3.4. Sample Selection
4. Empirical Results
4.1. A Univariate Test
4.2. Main Results
4.3. Long-Term Forecasting Window
5. A Summary and Conclusions
Author Contributions
Funding
Conflicts of Interest
References
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Variables | Mean | STD | MIN | Median | MAX |
---|---|---|---|---|---|
1.569 | 1.058 | 0.020 | 1.355 | 5.391 | |
1.415 | 1.112 | −0.681 | 1.190 | 5.599 | |
1.369 | 1.198 | −1.360 | 1.160 | 5.910 | |
1.267 | 0.874 | 0.000 | 1.386 | 3.091 | |
0.097 | 1.526 | −12.294 | −0.001 | 48.868 | |
0.917 | 2.098 | 0.000 | 0.083 | 12.007 | |
5.775 | 2.991 | 0.000 | 6.009 | 11.804 | |
7.488 | 1.593 | 4.309 | 7.392 | 11.477 | |
0.544 | 0.171 | 0.144 | 0.551 | 0.929 | |
0.057 | 0.065 | −0.182 | 0.057 | 0.225 | |
−0.019 | 0.092 | −0.279 | −0.025 | 0.305 |
Variables | Coeff. | t-Stat. | |
---|---|---|---|
Intercept | −0.187 | −4.53 | *** |
0.866 | 52.52 | *** | |
−0.032 | −4.48 | *** | |
−0.008 | −1.47 | ||
0.016 | 3.51 | *** | |
0.048 | 5.76 | *** | |
Industry Dummy | Included | ||
Adjusted | 0.61 | ||
F-stat. | 327.75 *** | ||
Number of observations | 4,789 |
Variables | Pred. Sign | Coeff. | t-Stat. | |
---|---|---|---|---|
Intercept | +/− | −0.457 | −5.04 | *** |
+/− | 0.013 | 1.75 | * | |
+/− | 0.012 | 2.04 | ** | |
+ | 0.279 | 23.07 | *** | |
− | −0.600 | −7.15 | *** | |
+/− | 0.327 | 1.54 | ||
− | −0.283 | −2.11 | ** | |
+/− | −0.043 | −4.85 | ** | |
Industry Dummy | N/A | Included | ||
Adjusted | 0.28 | |||
F-stat. | 328.12 *** | |||
Number of observations | 4,091 |
Variables | Coeff. | t-Stat. | |
---|---|---|---|
Intercept | −0.140 | −4.58 | *** |
0.902 | 74.58 | *** | |
−0.026 | −4.02 | *** | |
−0.005 | −1.26 | ||
0.008 | 2.51 | ** | |
0.037 | 6.50 | *** | |
Industry Dummy | Included | ||
Adjusted | 0.75 | ||
F-stat. | 932.29 *** | ||
Number of observations | 4,789 |
Variables | (Forecasting Equation) | (Earnings Equation) | Difference | ||||
---|---|---|---|---|---|---|---|
Coeff. | t-Stat. | Coeff. | t-Stat. | ||||
Intercept | −0.140 | −3.51 | *** | −0.186 | −3.46 | *** | |
0.902 | 114.57 | *** | 0.866 | 81.12 | *** | ||
−0.026 | −5.00 | *** | −0.032 | −4.56 | *** | ||
−0.005 | −1.16 | −0.008 | −1.35 | 1.56 | |||
0.008 | 2.42 | ** | 0.016 | 3.34 | *** | 15.64 *** | |
0.037 | 5.90 | *** | 0.048 | 5.68 | *** | ||
0.75 | 0.61 | ||||||
F-stat. | 408.28 *** | 372.41 *** | |||||
Number of observations | 4,789 | 4,789 |
Panel A. H1 | |||||
Variables | Coeff. | t-Stat. | |||
Intercept | −0.141 | −3.19 *** | |||
PATENTt | −0.005 | −1.21 | |||
CITEt | 0.014 | 3.19 *** | |||
Controls | Included | ||||
Adjusted R2 | 0.65 | ||||
F-stat. | 298.66 *** | ||||
Observations | 4,155 | ||||
Panel B. H2 | |||||
Variables | Coeff. | t-Stat. | |||
Intercept | −0.571 | −5.72 | |||
PATENTt | −0.004 | −0.48 | |||
CITEt | 0.011 | 1.73 * | |||
Controls | Included | ||||
Adjusted R2 | 0.27 | ||||
F-stat. | 106.4 *** | ||||
Observations | 3,588 | ||||
Panel C. H3a | |||||
Variables | Coeff. | t-Stat. | |||
Intercept | −0.117 | −3.59 *** | |||
PATENTt | −0.003 | −0.98 | |||
CITEt | 0.008 | 2.33 ** | |||
Controls | Included | ||||
Adjusted R2 | 0.76 | ||||
F-stat. | 559.62 *** | ||||
Observations | 4,155 | ||||
Panel D. H3b | |||||
Variables | Coeff. | t-Stat. | Coeff. | t-Stat. | Difference |
Intercept | −0.117 | −2.72 *** | −0.141 | −2.44 ** | |
PATENTt | −0.003 | −0.91 | −0.005 | −1.10 | 1.19 |
CITEt | 0.008 | 2.18 ** | 0.014 | 2.92 *** | 11.34 *** |
Controls | Included | Included | |||
Adjusted R2 | 0.76 | 0.62 | |||
F-stat. | 376.07 *** | 193.48 *** | |||
Observations | 4,155 | 4,155 |
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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
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 StyleGoh, 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