R&D Information Disclosure in the Service-Providing Sector: An Abstract

Public companies are mandated to release certain financial information periodically following the requirements of the Securities and Exchange Commission 1934 Act. Mandatory disclosure of financial information helps alleviate the problem of information asymmetry between companies and the public. However, financial information alone is not sufficient to reflect a firm’s value. For example, R&D projects, such as new product developments or process innovations, are not fully captured by financial metrics. Moreover, such activities are expected to signal long-term competitive edge, which in turn influences the current valuation of a firm.