Do Firms Respond to Peer Disclosures? Evidence from Disclosures of Clinical Trial Results

73 Pages Posted: 25 Mar 2019 Last revised: 26 Aug 2022

See all articles by Vedran Capkun

Vedran Capkun

HEC Paris

Yun Lou

Singapore Management University - School of Accountancy

Clemens A. Otto

Singapore Management University - Lee Kong Chian School of Business

Yin Wang

Singapore Management University - School of Accountancy

Date Written: August 4, 2022

Abstract

Using data on the registration of clinical trials and the disclosure of trial results, we examine how firms respond to peer disclosures. We find that firms are less likely to disclose their own trial results if the results of a larger number of closely related trials are disclosed by their peers. This relation is stronger if the firms face higher competition (as measured by the number of competing trials). It is weaker if the firms are further along in their research than the peers (as measured by the trials’ phase) and if the peers’ disclosures convey more negative news (as measured by the firms’ stock price reaction). We also find that firms are more likely to abandon ongoing trials if a larger number of peers disclose the results of closely related trials. Additional tests suggest that this real effects channel does not drive the impact on the firms’ disclosure decisions.

Note:
Funding Information: We gratefully acknowledge the financial support of HEC Paris, HEC Paris Foundation, Singapore Management University, and Investissements d’Avenir (ANR-11-IDEX-0003/Labex Ecodec/ANR-11-LABX-0047).

Conflict of Interests: None.

Keywords: Peer Disclosures; Disclosures of Clinical Trial Results

JEL Classification: M4

Suggested Citation

Capkun, Vedran and Lou, Yun and Otto, Clemens A. and Wang, Yin, Do Firms Respond to Peer Disclosures? Evidence from Disclosures of Clinical Trial Results (August 4, 2022). Singapore Management University School of Accountancy Research Paper No. 2019-102, HEC Paris Research Paper No. ACC-2019-1333, Available at SSRN: https://ssrn.com/abstract=3344942 or http://dx.doi.org/10.2139/ssrn.3344942

Vedran Capkun

HEC Paris ( email )

Jouy-en-Josas Cedex
France

Yun Lou (Contact Author)

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

Clemens A. Otto

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Yin Wang

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

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