Pre-Grant Patent Disclosure and Analyst Forecast Accurracy

Posted: 31 May 2018 Last revised: 6 May 2022

See all articles by Mehdi Beyhaghi

Mehdi Beyhaghi

Federal Reserve Banks - Federal Reserve Bank of Richmond

Pooyan Khashabi

ESSEC Business School

Ali Mohammadi

Copenhagen Business School - Department of Strategy and Innovation; Danish Finance Institute; Royal Institute of Technology (KTH) - Center of Excellence for Science and Innovation Studies

Date Written: March 25, 2022

Abstract

We examine the relationship between pre-grant patent disclosure and analyst forecast accuracy. We take advantage of the passage of the American Inventor’s Protection Act (1999), which mandates the pre-grant public disclosure of all information in patent application documents within 18 months of the initial filings. We find that on average, the pre-grant patent disclosure of corporate inventions significantly improves the accuracy of analyst forecasts about the patenting firm and that this improvement is greater for firms with higher research and development intensity. Nevertheless, improvements in the accuracy of analysts’ forecasts are smaller when firms issue more original and scientifically broader patents. Also, this effect is weaker for firms in states without legal protection for trade secrets.

Keywords: Dsclosure; Analyst forecasts; Patent; Information asymmetry

JEL Classification: G14, G32, L15, M40, O32

Suggested Citation

Beyhaghi, Mehdi and Khashabi, Pooyan and Mohammadi, Ali, Pre-Grant Patent Disclosure and Analyst Forecast Accurracy (March 25, 2022). Swedish House of Finance Research Paper No. 18-11, Available at SSRN: https://ssrn.com/abstract=3181936 or http://dx.doi.org/10.2139/ssrn.3181936

Mehdi Beyhaghi

Federal Reserve Banks - Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

Pooyan Khashabi

ESSEC Business School ( email )

1 Avenue Bernard Hirsch
Cergy, 50105
France

Ali Mohammadi (Contact Author)

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilen
Frederiksberg, 2000
Denmark

Danish Finance Institute ( email )

Royal Institute of Technology (KTH) - Center of Excellence for Science and Innovation Studies ( email )

Drottning Kristinas väg 30
Stockholm, SE-100 44
Sweden

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