Life Cycles of Firm Disclosures

Abstract

We examine the link between product life cycles and disclosure using a novel 4-stage text-based life cycle model and report two main results. First, the standard link between competition and less disclosure holds primarily in the early product development life cycle stage, when product strategies are not fully public. Second, firms with mature-stage products disclose more, consistent with lowering search costs for an outward-focused investment strategy seeking synergistic partners. These results obtain across a wide array of disclosure policies and in a quasi natural experiment. Our interpretations are further supported by tests examining not only the sender of disclosure, but also the intended receiver.

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

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