Associate Professor Luminta Enache, University of Calgary

"End of Intellectual Property and Voluntary Disclosure"
Wednesday, 05 March 2025.12:00-13:30
Room 141B, Adam Smith Business School

Abstract

This paper examines how the expiration of a firm’s intellectual property protection affects its voluntary disclosure decisions. Existing research suggests that managers weigh the benefits of disclosure against its potential costs, particularly during adverse events. We focus on a unique, predictable adverse event: patent expirations. Using granular data on pharmaceutical drug patents, we find that firms are less likely to issue management guidance during quarters surrounding patent expirations, with a notable reduction in short-term guidance. This behavior is driven by two key mechanisms: the predictable nature of patent expirations reduces the risk of shareholder lawsuits, and managers seek to mitigate reputational risks by avoiding forecasts that could be perceived as overly optimistic. Despite the reduction in quantitative guidance, managers enhance qualitative discussions on patent expirations during conference calls. Firms proactively address anticipated revenue declines by increasing innovation efforts well before expiration dates. Overall, this study highlights how managers strategically adapt disclosure practices to navigate market-anticipated adverse events.

 

Bio

Luminita Enache is an Associate Professor (with tenure) and a Future Fund Fellow. She joined the Haskayne School of Business in July 2018 as an Assistant Professor of Accounting. Her research interests lies at the intersection of accounting and finance, with a focus on empirical research that is closely guided by economic theory. Luminita is broadly focused on firms' information environment in capital markets, on the role intangibles plays in shaping the new economy firms, corporate governance and more recently on the health economics.

For further information, please contact business-school-research@glasgow.ac.uk

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First published: 3 March 2025

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