Say more to return less? Disclosure subsequent to successful technological innovation

Jing He and Dongyoung Lee

Journal of Empirical Finance, 2023, vol. 70, issue C, 403-426

Abstract: This study examines voluntary patent disclosure following successful technological innovations and the associated cost of equity capital (COEC) consequences. We find that firms with successful innovations, proxied by economic and scientific values of patents, are more likely to voluntarily disclose patent-related information in Form 8-K filings. This finding is more pronounced for firms with lower levels of product market competition and firms with higher ex-ante information asymmetry in the market. We also find that, unlike scientific values, economic values of patents are positively associated with COEC benefits in the presence of voluntary patent disclosure. Our overall findings are consistent with the capital market theory that innovative firms use voluntary disclosure to mitigate information asymmetry for greater capital market benefits.

Keywords: Innovation; Patent disclosure; Economic value; Scientific value; Information asymmetry; Cost of capital (search for similar items in EconPapers)
JEL-codes: M40 M41 O32 O34 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:empfin:v:70:y:2023:i:c:p:403-426

DOI: 10.1016/j.jempfin.2022.12.012

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