Melbourne Accounting Research Seminar - Professor Wayne Landsman

Professor Wayne Landsman from the University of North Carolina at Chapel Hill will present a MARS seminar.

Topic: Deterrent Disclosure

Abstract: We examine how product market competition affects the disclosure of innovation. Theory posits that product market competition can cause firms to increase their disclosure of innovation to deter competitors. Consistent with this reasoning, we find that patent applicants in more competitive industries voluntarily accelerate their patent disclosures, which are credibly disclosed via the United States Patent and Trademark Office. Our inferences are robust to using staggered changes in industry-level import tariffs as shocks to competition in a differences-in-differences design. Consistent with patent disclosures successfully deterring product market competitors, we find that timelier patent disclosures are more strongly associated with declines in the similarity of competitors’ products than are less timely patent disclosures. In total, our results suggest that product market competition increases patent disclosure, which is consistent with firms using the disclosure of innovation to deter product market competition.