Analysts’ Attention and R&D Expenditure: The Mediating Role of Financial Constraints

Abstract

Analyst plays an important role in the development of an enterprise. Meanwhile, during the process of this development, it is important to gain financial support. Analysts' opinions can change public investors’ behavior and sentiments dramatically. However, the relationship between the three factors is still waiting to be discussed. This article focuses on the relationship between analysts’ attention, corporate finance, and corporate innovation, using OLS and Panel FE estimation methods to analyze the problem, and finally concludes that analysts’ attention can reduce financial constraints and then have a positive influence on corporate innovation. Moreover, compared with a large company, middle and small-sized enterprises are influenced more by this attention. Based on the research result, this article proposed that companies, especially the middle and/ or small-sized companies, should pay attention to making the third party (i.e., the analysts) interested in them and increase their exposure among the analysts and the public.