The value relevance of descriptive R&D intensity

Cong Feng, Scott Fay and Saim Kashmiri

Journal of Business Research, 2022, vol. 139, issue C, 1394-1407

Abstract: Public firms have wide latitude to release descriptive research and development (R&D) information. Conceptually, a higher descriptive R&D intensity (DRDI) enables a more thorough assessment of a firm’s prospects and reduces information asymmetry. However, such disclosure may undermine the firm’s future competitive advantages by allowing competitors to observe the firm’s R&D efforts more closely. By analyzing the textual content of 23,269 annual reports and leveraging the staggered statewide rejection of the inevitable disclosure doctrine as our instrumental variable for DRDI, we find that DRDI positively affects firm value. We also find that the presence of Chief Innovation Officer and intangible know-how positively, while financial leverage and market turbulence negatively, moderate the effect of DRDI on firm value. Notably, although both DRDI and numerical R&D intensity (NRDI) deliver potentially valuable information about R&D activities, DRDI is distinct from and has a more significant explanatory power of firm value than NRDI.

Keywords: Information asymmetry; R&D; Firm value; Disclosure of innovation; Text analysis; Contingency factors (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296321007608
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:139:y:2022:i:c:p:1394-1407

DOI: 10.1016/j.jbusres.2021.10.033

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().