Analyst tracking and innovation inconsistency in companies

Abstract

Disclosing corporate innovation information plays a crucial role in investors’ decision-making. It is important to regulate the consistency between a company’s words and actions to ensure that their narrative innovation disclosures accurately reflect their innovation activities. This study utilizes data from Chinese A-share listed companies from 2011 to 2022 and explores the governance role of analyst coverage on corporate innovation inconsistency from a flexible governance perspective. The research finds that analyst tracking promotes a company’s innovation inconsistency of “saying less and doing more” through the information effect and suppresses “saying more and doing less” through the monitoring effect. Further, analysts who work harder, have higher education levels, are more motivated, and demonstrate greater independence and objectivity significantly impact companies’ innovation inconsistency. This study is of great theoretical and practical significance for understanding innovation inconsistency in companies, as well as the role of analysts in the capital market.