Companies get worse at truly innovating the more financial analysts cover them

They did a study! The number of patents filed (an easy, cross-industry measure of innovation, though not perfect) went down the more scrutiny there was overly quarterly performance:

[The study] demonstrated that companies produce fewer, and less-significant patents the more financial analysts cover them.

I’m fascinating by this quandary at tech companies. Some like Google and Apple seem fine, Microsoft who has generally had stellar financials over the past decade nonetheless gets punished (for not being Apple and Google, basically), and then folks like Dell feel the need to go private to escape this problem. It’s a wicked problem.

Companies get worse at truly innovating the more financial analysts cover them

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s