How firm internationalization is recognized by outsiders: The response of financial analysts

Although prior research has studied the strategic value of internationalization for firm performance, how such value is recognized and assessed by outsiders such as analysts is less well understood. Analysts' recommendations can serve as a reasonable proxy for the external response of internationalization strategy. In this study, we investigate how analysts evaluate the strategy of firm internationalization and interpret the value of internationalization in their reports. In the analyses of 326 large publicly traded firms over a 13-year period, we hypothesize and find support for the view that firm internationalization shares a curvilinear relationship with analysts' recommendations, as well as the moderating role of industry uncertainty and competition. Overall, this study contributes to the literature by investigating how financial analysts respond to a firm's internationalization strategy.