Managerial ability and narrative R&D disclosures

초록

This study investigates the effect of managerial ability on narrative research and development (R&D) disclosures, with a focus on forward-looking information in 10-K filings. By analysing public U.S. firms from 1996 to 2020, we find that higher managerial ability is associated with an increased quantity and improved readability of forward-looking R&D disclosures in 10-K reports. These results suggest that high-ability managers tend to provide more forward-looking statements about R&D activities and present information in a more readable manner compared to low-ability managers. Additionally, our findings are more pronounced in firms with low R&D intensity and less market competition, suggesting that managers consider proprietary costs in their R&D disclosure decisions. Overall, our study suggests managerial ability as a key determinant of narrative R&D disclosures.

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