West Virginia University research shows the stock market shapes chief executive officers’ commitments to innovation through mechanisms that range from CEO pay packages to feedback from financial analysts.

“The investment industry usually views financial analysts’ feedback, such as earnings forecasts, as impeding innovation because of the pressure the feedback puts on CEOs,” said Xinchun Wang, associate professor of marketing at the WVU John Chambers College of Business and Economics. “But not all feedback provided by analysts generates that kind of pressure. Stock recommendations actually foster explorative activities like research and development — investments that, although risky, can positively affect long-term returns.” READ MORE