We examine the relation between manager horizon and discretionary disclosure, using patenting as a measure of disclosure. Patenting reflects, in part, a manager’s decision to disclose the successful outcome of research and development (R&D). When a firm invests in R&D but does not patent, investors are unsure whether this reflects a failed R&D project or the manager choosing not to patent. We suggest that investors’ beliefs about a manager’s horizon—whether the manager seeks to maximize short-term stock price or long-term profits—moderates their reactions. When investors believe a manager’s horizon is short, they expect the manager to disclose successful outcomes and therefore discount nondisclosure more. We predict that managers will patent more per dollar of R&D spending when their horizons are short and that investors will discount the value of nondisclosing firms more when they believe the manager’s horizon is short. We find evidence consistent with these predictions.
Stephen Glaeser
Contact Information
- Primary Email:
sglaeser@wharton.upenn.edu - Office Phone:
215-898-7772
- office Address:
1360 SHDH
Philadelphia, PA 19104
Links: CV
Activity
Latest Research
Jeremy Michels, Stephen Glaeser, Robert E. Verrecchia (2020), Discretionary Disclosure and Manager Horizon: Evidence from Patenting, Review of Accounting Studies, 25 (), pp. 597-635. 10.1007/s11142-019-09520-0
All ResearchIn the News
Why All Investors Are Vulnerable to ‘Correlation Neglect’New research from Wharton's Jessica Wachter explores a behavioral phenomenon that causes investors to treat information as independent when it is actually correlated.…Read More
Knowledge @ Wharton - 2026/02/10