Simeth, M. (Markus)

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    Asymmetric information and R&D disclosure: Evidence from scientific publications
    (Informs, 2024-03-23) Wehrheim, D. (David); Baruffaldi, S. (Stefano); Simeth, M. (Markus)
    We examine how asymmetric information in financial markets affects voluntary research and development (R&D) disclosure, considering scientific publications as a disclosure channel. Difference-in-differences regressions around brokerage house mergers and closures, which increase information asymmetry through reductions in analyst coverage, indicate a quick and sustained increase in scientific publications from treated firms relative to the number of publications from control firms. The treatment effects are concentrated among firms with higher information asymmetry and lower investor demand, firms with greater financial constraints, and firms with lower proprietary costs. We do not find evidence of changes in financial disclosure, nor do we find changes in patenting. Results from ordinary least squares regressions show that scientific publications by firms are positively associated with investor attention toward those firms. We complement these results with qualitative evidence from conference calls. Our results highlight the limitations and trade-offs R&D firms face in their financial market disclosure policies.
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    On “innovation and institutional ownership”
    (Elsevier, 2024-06) Wehrheim, D. (David); Simeth, M. (Markus)
    In their article “Innovation and Institutional Ownership”, Aghion, Van Reenen and Zingales (2013) find that the rise in institutional stock ownership in the U.S. during the 1990s led to an increase in corporate innovation, as measured by patent and patent citation counts. Their article concludes that “contrary to the view that institutional ownership induces a short-term focus in managers, we find that their presence boosts innovation” (p. 302). Subsequent research has generally accepted this finding at face value. However, we uncover several critical issues with their data. Addressing these issues renders the results economically and statistically insignificant and, in some instances, even suggests a negative relationship between institutional ownership and U.S. innovation.