Pre-Grant Patent Disclosure and Analyst Forecast Accuracy: Evidence from The American Investor’s Protection Act

46 Pages Posted: 31 May 2018 Last revised: 11 Apr 2019

See all articles by Mehdi Beyhaghi

Mehdi Beyhaghi

Federal Reserve Banks - Federal Reserve Bank of Richmond

Pooyan Khashabi

Ludwig Maximilian University of Munich - Institute for Strategy, Technology and Organization (ISTO)

Ali Mohammadi

Copenhagen Business School - Department of Strategy and Innovation; KTH Royal Institute of Technology

Date Written: April 10, 2009

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) that mandates public disclosure of all the information in patent application documents within 18-months after initial filings, regardless of whether or not a patent was granted. We find that the pre-grant patent disclosure significantly improves the analyst forecast accuracy of affected firms on average. However, this effect is smaller for firms issuing patents with broader scopes and with higher originality. We also find that the pre-grant disclosure effect of patents on analyst forecast accuracy is significantly larger for firms in the discrete product industries and for firms in the U.S. states with legal protection for trade secrets.

Keywords: disclosure; 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 Accuracy: Evidence from The American Investor’s Protection Act (April 10, 2009). 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

Ludwig Maximilian University of Munich - Institute for Strategy, Technology and Organization (ISTO) ( email )

Kaulbachstr, 45
Munich, 80539
Germany
+49 89 2180 5415 (Phone)

Ali Mohammadi (Contact Author)

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

Kilen
Frederiksberg, 2000
Denmark

KTH Royal Institute of Technology ( email )

Stockholm
Sweden

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