The value relevance of descriptive R&D intensity

Cong Feng, Scott Fay, Saim Kashmiri

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


Public firms have wide latitude to release descriptive research and development (R&D) information. Conceptually, a higher descriptive R&D intensity (DRDI) enables a more thorough assessment of a firm's prospects and reduces information asymmetry. However, such disclosure may undermine the firm's future competitive advantages by allowing competitors to observe the firm's R&D efforts more closely. By analyzing the textual content of 23,269 annual reports and leveraging the staggered statewide rejection of the inevitable disclosure doctrine as our instrumental variable for DRDI, we find that DRDI positively affects firm value. We also find that the presence of Chief Innovation Officer and intangible know-how positively, while financial leverage and market turbulence negatively, moderate the effect of DRDI on firm value. Notably, although both DRDI and numerical R&D intensity (NRDI) deliver potentially valuable information about R&D activities, DRDI is distinct from and has a more significant explanatory power of firm value than NRDI.

Original languageEnglish (US)
Pages (from-to)1394-1407
Number of pages14
JournalJournal of Business Research
StatePublished - Feb 2022


  • Contingency factors
  • Disclosure of innovation
  • Firm value
  • Information asymmetry
  • R&D
  • Text analysis

ASJC Scopus subject areas

  • Marketing


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