Product market competition and R&D disclosure transparency: evidence from earnings communication conferences in China

This study examines how product market competition influences firms’ R&D disclosure transparency. Using a novel text-based measure derived from the transcripts of earnings communication conferences (ECCs) of Chinese listed firms, we document that increased competition from potential entrants significantly enhances R&D disclosure transparency. This effect is more pronounced among firms that are financially constrained, have stronger incentives to deter new entrants, and face lower proprietary costs. Further analysis shows that greater R&D disclosure transparency is associated with lower financing costs for disclosing firms and reduced R&D activity among their industry peers. Overall, our findings suggest that firms strategically enhance R&D disclosure transparency in response to competitive threats from potential market entrants, balancing the benefits of reduced financing costs and entry deterrence against the potential risks of revealing proprietary information.