재무연구 제 권 호 (2020년 8월)
Asian Review of Financial Research, Vol., No..
pp.1051~1083
pp.1051~1083
Does Analyst Coverage Encourage Firm Innovation? Evidence from Korea
Woojin Kim Professor of Finance, Seoul National University Business School
Yoon Young Choy Seoul National University Business School
This paper examines whether analyst coverage affects firm innovation in an economy dominated by family-controlled business groups. Using a sample of Korean publicly traded firms from 2010- 2018, we find that an increase in financial analysts results in lower level of R&D. Especially, unlike in U.S., firms with more analyst coverage tend to cut investments in corporate venture capital. Moreover, the reduction in R&D is more pronounced when analysts are from other chaebol (family-controlled large business group) affiliated brokerages. These findings suggest that analyst coverage may function more as a “pressure” mechanism than “information” mechanism when information environment is less transparent.
Woojin Kim
Yoon Young Choy
This paper examines whether analyst coverage affects firm innovation in an economy dominated by family-controlled business groups. Using a sample of Korean publicly traded firms from 2010- 2018, we find that an increase in financial analysts results in lower level of R&D. Especially, unlike in U.S., firms with more analyst coverage tend to cut investments in corporate venture capital. Moreover, the reduction in R&D is more pronounced when analysts are from other chaebol (family-controlled large business group) affiliated brokerages. These findings suggest that analyst coverage may function more as a “pressure” mechanism than “information” mechanism when information environment is less transparent.
