Pre-Grant Patent Disclosure and Analyst Forecast Accuracy : Evidence from The American Inventor’s Protection Act

We examine the relationship between pre-grant patent disclosure and analyst forecast accuracy. We take advantage of the passage of the American Inventor's Protection Act (1999) that mandates public disclosure of all the information in patent application documents within 18-months after initial filings, regardless of whether or not a patent was granted. We find that the pre-grant patent disclosure significantly improves the analyst forecast accuracy of affected firms on average. However, this effect is smaller for firms issuing patents with broader scopes and with higher originality. We also find that the pre-grant disclosure effect of patents on analyst forecast accuracy is significantly larger for firms in the discrete product industries and for firms in the U.S. states with legal protection for trade secrets