R&D disclosure and institutional investors: Evidence from mandated patent disclosure

48 Pages Posted: 8 Mar 2018 Last revised: 30 Nov 2023

See all articles by Iván Blanco

Iván Blanco

CUNEF University

Sergio J. García

CUNEF Universidad

David Wehrheim

IESE Business School

Date Written: November 22, 2023


We examine institutional investors' preferences for research and development (R&D) disclosure. Difference-in-differences (DiD) regressions around the enactment of the American Inventors Protection Act (AIPA), which enhanced firms' R&D disclosure requirements by improving the timeliness and scope of patent disclosures, indicate an increase in institutional ownership for more affected firms relative to less affected firms. This increase occurs during the period when the actual content of patent applications is not yet known and is consistent with the hypothesis that institutional investors value more forthcoming R&D disclosure. Further support is provided by stronger treatment effects among firms expected to file patents, those facing greater ex-ante asymmetric information, and those with higher ex-ante concerns over resource diversion. Disaggregating by the type of institutional investor reveals that transient and quasi-indexed institutions are attracted to R&D disclosure. However, dedicated institutions show insensitivity to it. Our results highlight important trade-offs in firms' R&D disclosure practices with respect to the composition of the institutional investor base.

Keywords: institutional investors, mandated patent disclosure, monitoring costs, R&D disclosure, transaction costs

JEL Classification: G23, G32, M41, O32, O34, O38

Suggested Citation

Blanco, Iván and García, Sergio J. and Wehrheim, David, R&D disclosure and institutional investors: Evidence from mandated patent disclosure (November 22, 2023). Available at SSRN: https://ssrn.com/abstract=3132494 or http://dx.doi.org/10.2139/ssrn.3132494

Iván Blanco

CUNEF University ( email )

C/ Leonardo Prieto Castro, 2
Madrid, Madrid 28040

HOME PAGE: http://cunef.edu/

Sergio J. García (Contact Author)

CUNEF Universidad ( email )

Calle de los Pirineos 55
Madrid, 28040

David Wehrheim

IESE Business School ( email )

Camino Cerro del Águila, 3
Madrid, Madrid 28023

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