To better understand the impact of financial analysts on firm innovation, we examine an often-overlooked relationship between stock recommendations and firms’ strategic emphasis on exploration over exploitation. In contrast to studies suggesting that firms respond to earnings forecasts in a myopic manner that reduces R&D spending and hurts innovation, we show that low stock recommendations motivate firms to emphasize exploration despite the risks. The degree to which firms’ responses follow this behavioral-theory-based prediction is contingent on CEOs’ motivation and ability in strategic decision-making. Governance mechanisms, including equity compensation and institutional ownership, align CEOs’ personal interest with firm interest and motivate them to choose the predicted response. Marketing department power enhances CEOs’ ability to choose the predicted response because it enables the use of market knowledge to evaluate benefits and risks of exploration and exploitation. The findings contribute to research on financial analysts, the role of marketing, and exploration/exploration strategy.

为了更好地了解金融分析师对公司创新的影响，我们研究了股票推荐与公司战略强调勘探而非开采之间经常被忽视的关系。与研究表明公司以短视的方式响应盈利预测以减少研发支出并损害创新相反，我们表明，低库存推荐会促使公司不顾风险强调探索。公司的反应在多大程度上遵循这种基于行为理论的预测，取决于 CEO 在战略决策中的动机和能力。治理机制，包括股权薪酬和机构所有权，使 CEO 的个人利益与公司利益保持一致，并激励他们选择预测的响应。营销部门的权力增强了 CEO 选择预测响应的能力，因为它支持使用市场知识来评估勘探和开采的好处和风险。这些发现有助于对金融分析师、营销的作用和探索/探索策略的研究。