Regulatory Approval and Biotechnology Product Disclosures.

57 Pages Posted: 3 Dec 2018 Last revised: 8 Oct 2021

See all articles by Luminita Enache

Luminita Enache

University of Calgary; University of Calgary; Dartmouth College - Tuck School of Business

Lynn Li

Boston University - Questrom School of Business

Eddie Riedl

Boston University - Questrom School of Business

Date Written: October 7, 2021

Abstract

This paper examines the effect of regulatory approval on a firm's voluntary product-level disclosures. We focus on the US biotechnology industry, a setting which allows direct observation of whether firms disclose more information as products proceed through well-defined—though successively more complex and costly—regulatory hurdles. Consistent with predictions motivated by biotech firms’ need to repeatedly raise capital, we find that firms disclose more as their products move to later stages in the development process, both when the products receive regulatory approvals, as well as when they receive regulatory denials. In addition, these findings are consistent across phases of development as well as product disclosure categories, and accentuated for firms without internal sources of capital (i.e., lacking product revenue). Collectively, these findings reveal that biotechnology firms respond to the considerable incentives to provide enhanced product disclosure, and thus facilitate their ongoing need for capital to proceed through subsequent stages of product development.

Keywords: voluntary disclosure, product disclosure, regulatory approval, biotech industry, FDA

JEL Classification: M41, L65

Suggested Citation

Enache, Luminita and Enache, Luminita and Li, Lynn and Riedl, Edward J., Regulatory Approval and Biotechnology Product Disclosures. (October 7, 2021). Available at SSRN: https://ssrn.com/abstract=3290822 or http://dx.doi.org/10.2139/ssrn.3290822

Luminita Enache

University of Calgary ( email )

Calgary, Alberta
Canada

HOME PAGE: http://haskayne.ucalgary.ca/haskayne_info/profiles/luminita-enache

University of Calgary ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada
T3G3S2 (Fax)

HOME PAGE: http://https://haskayne.ucalgary.ca/haskayne_info/profiles/luminita-enache

Dartmouth College - Tuck School of Business ( email )

Calgary, Alberta
Canada

HOME PAGE: http://haskayne.ucalgary.ca/haskayne_info/profiles/luminita-enache

Lynn Li

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

Edward J. Riedl (Contact Author)

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-2317 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
142
Abstract Views
1,105
rank
255,352
PlumX Metrics