Asymmetric Information and R&D Disclosure: Evidence from Scientific Publications

Stefano Baruffaldi (), Markus Simeth () and David Wehrheim ()
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Stefano Baruffaldi: Department of Management, Economics, and Industrial Engineering, Politecnico di Milano, 20133 Milan, Italy; Max Planck Institute for Innovation and Competition, 80539 Munich, Germany; School of Management, University of Bath, Bath BA27AY, United Kingdom
Markus Simeth: Department of Strategy and Innovation, Copenhagen Business School, 2000 Frederiksberg, Denmark
David Wehrheim: Strategic Management Department, IESE Business School, University of Navarra, 08034 Barcelona, Spain

Management Science, 2024, vol. 70, issue 2, 1052-1069

Abstract: We examine how asymmetric information in financial markets affects voluntary research and development (R&D) disclosure, considering scientific publications as a disclosure channel. Difference-in-differences regressions around brokerage house mergers and closures, which increase information asymmetry through reductions in analyst coverage, indicate a quick and sustained increase in scientific publications from treated firms relative to the number of publications from control firms. The treatment effects are concentrated among firms with higher information asymmetry and lower investor demand, firms with greater financial constraints, and firms with lower proprietary costs. We do not find evidence of changes in financial disclosure, nor do we find changes in patenting. Results from ordinary least squares regressions show that scientific publications by firms are positively associated with investor attention toward those firms. We complement these results with qualitative evidence from conference calls. Our results highlight the limitations and trade-offs R&D firms face in their financial market disclosure policies.

Keywords: financial analysts; information asymmetry; investor attention; R&D disclosure; scientific publications (search for similar items in EconPapers)
Date: 2024
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