Corporate strategy, analyst coverage, and the uniqueness paradox

Lubomir P. Litov, Patrick Moreton, Todd R. Zenger

Research output: Contribution to journalArticlepeer-review

80 Scopus citations


In this paper, we argue that managers confront a paradox in selecting strategy. On one hand, capital markets systematically discount uniqueness in the strategy choices of firms. Uniqueness in strategy heightens the cost of collecting and analyzing information to evaluate a firm's future value. These greater costs in strategy evaluation discourage the collection and analysis of information regarding the firm, and result in a valuation discount. On the other hand, uniqueness in strategy is a necessary condition for creating economic rents and should, except for this information cost, be positively associated with firm value. We find empirical support for both propositions using a novel measure of strategy uniqueness in a firm panel data set between 1985 and 2007.

Original languageEnglish (US)
Pages (from-to)1797-1815
Number of pages19
JournalManagement Science
Issue number10
StatePublished - Oct 2012
Externally publishedYes


  • Analyst coverage
  • Corporate strategy
  • Diversification
  • Strategic uniqueness

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research


Dive into the research topics of 'Corporate strategy, analyst coverage, and the uniqueness paradox'. Together they form a unique fingerprint.

Cite this