Do Firms Respond to Peer Disclosures? Evidence from Disclosures of Clinical Trial Results
75 Pages Posted: 25 Mar 2019 Last revised: 30 Nov 2021
Date Written: November 30, 2021
Using data on the registration of clinical trials and the disclosures of the trials’ results on ClinicalTrials.gov, we examine how firms respond to peer disclosures. We find that firms are less likely to disclose the results of their own trials if the results of a larger number of closely related trials are disclosed by the firms’ peers. This relation is stronger if the firms face higher competition (as measured by the number of competing trials), and it is weaker if the firms are further along in their research than the peers (as measured by the phase of the trials) and if the peers’ disclosures convey more negative news for the firms (as measured by the firms’ stock price reaction). In an ancillary test, we also find that firms are more likely to abandon their own, ongoing trials if a larger number of peers disclose the results of closely related trials.
Keywords: Peer Disclosures; Disclosures of Clinical Trial Results
JEL Classification: I11; M41;G10
Suggested Citation: Suggested Citation