The Guanghua School of Management
Peking University
Department of Strategic Management
You are cordially invited to the following seminar hosted by the Department of Strategic Management (seminar 2009-2010 (05)) at the Guanghua School of Management.
Topic: PERFORMANCE RELATIVE TO SECURITY ANALYSTS’ EARNINGS FORECAST AND FIRM R&D INTENSITY
Venue: Room 111, The New Building of GSM, PKU
Time: 10:30 am -12:00 pm, April 7th, 2010 (Wednesday)
Speaker: Wei SHEN, Senior Research Fellow, Skolkovo Institute for Emerging Market Studies
Should you have any enquiries, please contact Ms. Xuan Wang of the Strategy Department:[email protected]
PERFORMANCE RELATIVE TO SECURITY ANALYSTS’ EARNINGS FORECAST AND FIRM R&D INTENSITY
ABSTRACT
Adopting the notion of target-based performance assessment from the behavioral theory of the firm, our study examines the impact of performance relative to analyst forecasts on firm R&D intensity. We argue that top managers, acting out of self-interest, use a reduction in R&D intensity as a means to increase the chance of meeting analyst forecasts. Using data from a large sample of U.S. manufacturing firms from 1979 to 2005, we find that performance gap relative to analyst forecast is negatively related to firm R&D intensity in the following year , and that firms tend to reduce R&D intensity more when their performance is below analyst forecast. We also find that the level of analyst coverage moderates the negative relation in firms that missed analyst forecast, but not in firms that met analyst forecast.
Wei Shen is a Senior Research Fellow at the Skolkovo Institute for Emerging Market Studies in Beijing. He received his Ph.D. in strategic management from Texas A&M University. Before joining Skolkovo, he was an Associate Professor of strategic management and Huber Hurst Faculty Fellow at the University of Florida. His research interests are in the areas of strategic leadership, corporate governance, organizational search, and research methodology. He has published in several scholarly journals, including the Academy of Management Journal, Academy of Management Review, and Strategic Management Journal. Currently he serves on the editorial boards of the AMJ, AMR, and SMJ.
