Offsetting illegitimacy? How pressures from securities analysts influence incumbents in the face of new technologies

Mary J. Benner, Ram Ranganathan

Research output: Contribution to journalArticlepeer-review

65 Scopus citations

Abstract

We study how analysts' recommendations affect firms' strategies during radical technological shifts. We find, from our study of firms in three industries undergoing technological change, that analysts' recommendations trigger changes in strategic investments during periods of uncertain technological change. We also find that firms that make high investments despite negative analysts' recommendations announce a higher value of share repurchases, an action that may offset the growing illegitimacy of these increased investments by signaling alignment with shareholders' interests. Radical technological changes provide a source of exogenous variation that contributes to explanation of how firms balance technological pressures for adaptation and institutional pressures for legitimacy.

Original languageEnglish (US)
Pages (from-to)213-233
Number of pages21
JournalAcademy of Management Journal
Volume55
Issue number1
DOIs
StatePublished - Feb 1 2012

Fingerprint Dive into the research topics of 'Offsetting illegitimacy? How pressures from securities analysts influence incumbents in the face of new technologies'. Together they form a unique fingerprint.

Cite this