Determinants of R&D Disclosures of Nasdaq-Listed Biotechnology Firms

• Main Authors: TAN, Pearl Hock Neo, GAN, Peck-Yen, LOW, Calvin, Chim, Wai-Kay
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2005
• Subjects: Research and development disclosures; Financial reporting; NASDAQ; Accounting; Corporate Finance
• Online Access: https://ink.library.smu.edu.sg/soa_research/76
• Institution: Singapore Management University

This study investigates the determinants of discretionary research and development (R&D) disclosures of biotechnology firms listed on the NASDAQ. Our study proposes that firms with higher levels of information asymmetry are more likely to disclose information about R&D than firms with lower levels of information asymmetry. However, proprietary costs thwart the incentives for firms to adopt a policy of full disclosure on R&D. We find results that are consistent with our propositions. Firms that have higher levels of information asymmetry that are proxied by higher growth options, higher concentrations of R&D expenditures and dependence on equity funding (as opposed to debt funding) are found to have higher levels of R&D disclosures. Further, our results show that firms that have lower proprietary costs through patent protection or through having a size advantage disclose more information than other firms.