Abstract
This study employs the behavioral theory of the firm and the attention-based view to examine the connection between performance feedback and strategic change in the external monitoring mechanism extracted from stock analysts. Based on a sample of Taiwanese electronic firms from 2001 to 2020, we first found that firms tend to search for alternative strategic options when facing below-aspiration performance. Next, analyst coverage and forecast dispersion, as sources for revising the attention structure of decision-makers, become the contingencies for explaining this connection. However, we also found that firms avoid strategic change when experiencing above-aspiration performance and the contingent roles become neutralized in this scenario.
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