Asymmetric Information and R&D Disclosure: Evidence from Scientific Publications

63 Pages Posted: 21 Jan 2021 Last revised: 24 Oct 2022

See all articles by Stefano Baruffaldi

Stefano Baruffaldi

University of Bath; Max Planck Institute for Innovation and Competition

Markus Simeth

Copenhagen Business School - Department of Strategy and Innovation

David Wehrheim

IESE Business School

Date Written: October 24, 2022

Abstract

We examine how asymmetric information in financial markets affects voluntary R&D disclosure, considering scientific publications as a disclosure channel. Difference-in-differences regressions around brokerage house mergers and closures indicate a quick and sustained increase in scientific publications from treated firms relative to the number of publications from control firms. The treatment effects are concentrated among firms with a large increase in information asymmetry and decline in investor demand, firms with greater financing constraints, and firms with low proprietary costs. We do not find evidence of changes in financial disclosure, nor do we find changes in patenting. Results from ordinary least squares regressions show that scientific publications by firms are positively associated with investor attention toward those firms. We complement these results with qualitative evidence from conference calls. Our results highlight the limitations and trade-offs that R&D firms face in their financial market disclosure policies.

Keywords: information asymmetries, innovation disclosure, corporate science, financial analysts, signaling, innovation, R&D

JEL Classification: O32, O34, G30

Suggested Citation

Baruffaldi, Stefano and Simeth, Markus and Wehrheim, David, Asymmetric Information and R&D Disclosure: Evidence from Scientific Publications (October 24, 2022). Available at SSRN: https://ssrn.com/abstract=3749418 or http://dx.doi.org/10.2139/ssrn.3749418

Stefano Baruffaldi

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

Markus Simeth (Contact Author)

Copenhagen Business School - Department of Strategy and Innovation ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

David Wehrheim

IESE Business School ( email )

Camino Cerro del Águila, 3
Madrid, Madrid 28023
Spain

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