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Do technology spillovers affect the corporate information environment?

Phuong-Anh Nguyen and Ambrus Kecskés

Journal of Corporate Finance, 2020, vol. 62, issue C

Abstract: Technology spillovers across firms affect corporate innovation, productivity, and value, according to prior research, so information about technology spillovers should matter to investors. We argue that technology spillovers increase the complexity and uncertainty of value relevant information about the firm, which makes information processing more costly, discourages it, and thereby increases information asymmetry between insiders and outsiders. We find that not only does information asymmetry increase, but so does avoidance by sophisticated market participants, uncertainty, and insider trading. We also find that investors do not misestimate short-term earnings, but they underestimate long-term earnings, consistent with the higher future stock returns that we also find.

Keywords: Innovation; Technology spillovers; Research and development; Information asymmetry; Valuation; Earnings; Mispricing (search for similar items in EconPapers)
JEL-codes: G12 G14 G23 G24 G41 M40 O31 O32 O33 O34 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:62:y:2020:i:c:s0929119920300250

DOI: 10.1016/j.jcorpfin.2020.101581

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