Does it pay to be socially connected with analysts? Evidence from persistent innovation

This study investigates the impact of connected analysts – those who follow a firm and are socially connected to the firm’s managers – on the firm’s persistent innovation. We show that connected analysts significantly promote the persistence of innovation output, particularly in terms of invention and exploitative innovation. Specifically, connected analysts promote persistent innovation input by alleviating information asymmetry and foster persistent innovation output by facilitating access to external knowledge. Notably, the effect is more salient when a firm is in a region with strong intellectual property protection or high levels of trust, and the connection is derived from education and business relationships.