Information Transparency and Investment in Follow-on Innovation

• 成果类型: Article
• 署名作者: Chen, Jeff Zeyun; Kim, Yongtae; Yang, Leo L.; Zhang, Joseph H.
• 署名单位: Texas Christian University; Santa Clara University; Korea Advanced Institute of Science & Technology (KAIST); University of Memphis
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12848
• 发表日期: 2023
• 页码: 1176-1209
• 关键词: research-and-development; patent citations; knowledge spillovers; earnings quality; uncertainty; disclosure; FLOWS; performance; PROTECTION; OWNERSHIP

摘要

This study examines the role of information transparency in facilitating peer firms' investment in follow-on innovation. We capture information transparency with both textual and numerical information disclosed in 10-Ks. Using patent citations to proxy for investment in follow-on innovation, we predict and find a positive association between transparency at the knowledge source and follow-on innovation. We further show that the effect of information transparency varies with the degree of uncertainty around technological innovation. Thus, the evidence suggests that information transparency facilitates investment in follow-on innovation by resolving uncertainty associated with investment in technological innovation. An analysis using the cited firms' going-private decision as a negative shock to information transparency confirms the significant effect of a cited firm's disclosure on its decision to invest in follow-on innovation. Our study contributes to the literature on the positive externalities of peer-firm disclosures and highlights the important role of information transparency in shaping innovation investment decisions.