When do firms voluntarily disclose qualitative information about R&D projects

Some firms that have publicly traded securities face a dilemma in making R&D disclosures. By reducing investor uncertainty in estimating potential R&D outcomes, greater disclosure can help to lower financing costs. However, disclosure can unintentionally increase imitation risk by making R&D projects more transparent. My dissertation examines this "paradox of disclosure" in a study of the conditions under which firms make voluntary disclosures about R&D projects.; I argue that firms with a greater need for financing or higher financing costs will disclose more information because they can achieve higher subsequent financing benefits. I further argue that firms with strong technological capabilities or strong intellectual property (IP) protection have greater incentives to disclose. Firms with strong technology positions may deter new entrants in a product market or attract new trading partners by signaling that they have superior capabilities. Similarly, firms with strong IP protection may achieve the financing benefits of disclosure without increasing imitation risk.; Utilizing a random effects negative binomial model, I test this theory on a sample of 155 communications equipment and 165 pharmaceutical firms over the period 1991 to 2003. The results are consistent with the view that keeping R&D projects secret may be a winning strategy for firms with weak technological capabilities and weak intellectual property protection. Alternatively, firms with stronger technological capabilities may achieve net strategic benefits from greater disclosure that outweigh the potential benefits of lower financing costs.