Journal of Financial and Quantitative Analysis Vol. 61 No. 1 2026

Measuring the Economic Value of an Innovation When Some Investors Are Inattentive

Thomas J. Chemmanur¹; Dongmei Li²; Kevin Tseng³; Yvonne Yu Wang⁴

¹ Boston College Carroll School of Management · ² University of South Carolina Darla Moore School of Business · ³ Chinese University of Hong Kong School of Business and National Taiwan University College of Management · ⁴ University of Arkansas Walton College of Business

Abstract

We analyze the effects of limited investor attention on the stock market reaction to innovation announcements and develop a new measure of patents’ economic value. We hypothesize that, when some investors pay delayed attention to innovation announcements, there will be a post-announcement drift in addition to the announcement effect, with the former decreasing and the latter increasing in investor attention. Using media coverage and abnormal Google search volume as investor attention proxies, we find consistent evidence. Our new attention-weighted measure of patents’ economic value has greater predictive power for future firm performance than measures based on the announcement effect alone.

DOI

10.1017/s0022109025101658

Volume

61

Issue

1

Pages

206-238

Language

en

Sources

openalex crossref

Cite

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