Stock market liberalization and corporate R&D disclosure: evidence from China

Abstract

This paper investigates the impact of stock market liberalization on corporate R&D disclosure using the Mainland China–Hong Kong Stock Connect program as a quasi-natural experiment. Contrary to the widely held view that liberalization enhances overall corporate transparency, we find that the topics of R&D information disclosure are more scattered, and the narrative is less specific following liberalization. This effect is particularly pronounced among firms with higher proprietary costs. We argue that increased exposure to foreign investors intensifies competitive pressures, leading firms to strategically limit public disclosure of sensitive R&D information to mitigate the risk of information leakage. Additionally, we document a rise in private communications with investors post-liberalization, particularly on R&D-related topics, suggesting a deliberate shift toward more selective disclosure channels where firms can better control the audience and content of information shared.