Life Cycles of Firm Disclosures

66 Pages Posted: 3 Nov 2020 Last revised: 15 Jan 2021

See all articles by AJ Chen

AJ Chen

University of Southern California - Marshall School of Business

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business

Date Written: January 12, 2021

Abstract

We propose that the product life cycle is important in understanding firm disclosure policies and test this hypothesis using a 4-dimensional text-based life cycle model. Mature-stage firms disclose more, consistent with lowering search costs for an outward-focused investment strategy seeking synergistic partners. Early-stage life cycle firms are secretive, consistent with inward-focused organic investment and mitigating competitive threats. These results obtain across disclosure measures relating to intellectual property, redaction of contracts, readability, and conference calls. A quasi-natural experiment based on waves of rapid depreciation of protected intellectual property, and internet co-search tests targeting specialized sender and receiver hypotheses, reinforce this interpretation.

Keywords: Disclosures, Life-Cycle, Investment, Competition, Patents, Redaction, EDGAR Search

JEL Classification: D83, E22, G34, L15, M41

Suggested Citation

Chen, AJ and Hoberg, Gerard and Maksimovic, Vojislav, Life Cycles of Firm Disclosures (January 12, 2021). Available at SSRN: https://ssrn.com/abstract=3703931 or http://dx.doi.org/10.2139/ssrn.3703931

AJ Chen (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd, HOH 431
Los Angeles, CA California 90089-1424
United States

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://www-bcf.usc.edu/~hoberg/

Vojislav Maksimovic

University of Maryland - Robert H. Smith School of Business ( email )

Van Munching Hall
College Park, MD 20742-1815
United States
301-405-2125 (Phone)
301-314-9157 (Fax)

HOME PAGE: http://scholar.rhsmith.umd.edu/vmax/home

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