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The Implications of Investments in and Realizations of Intangibles for Analysts’ Forecasts of Earnings Growth

Fri, June 2, 11:00am to 12:00pm, Virtual, TBA

Abstract

The Implications of Investments in and Realizations of Intangibles for Analysts’ Forecasts of Earnings Growth
ABSTRACT
I distinguish between investment in (R&D expenses), and realization of (patents) of intangibles, and examine their respective implications for analysts’ EPS growth forecasts and forecast efficiency. I find evidence as follows: First, R&D have negative (positive) implications for short (long) term EPS growth forecasts. Second, and consistent with prior studies, R&D have negative implications for both long and short term forecasts efficiency. Third, patents have positive implications for both short and long term EPS growth forecasts. Fourth, patents have positive implications for both short term and long term forecast efficiency. Fifth, revisions of (growth) forecasts are positively associated with patents but not R&D. Sixth, I document a highly stochastic relation between patents and the past six years’ investments in intangibles, whereby R&D account for a maximum of 23.50% (35.40% with other controls) of variations in patents.

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