Innovation disclosure in times of uncertainty

A recent literature shows that many firms feature missing R&D expenses in their accounting statements. This study explores how economic policy uncertainty affects the decision to disclose innovation‐related information. Empirical analyses on a panel of U.S. listed companies show that policy uncertainty increases the likelihood of missing R&D (as opposed to both positive and zero R&D). This result is more pronounced for firms that enjoy a leadership position in their industry, firms in states subject to a weaker legal protection of internal knowledge, and firms that rely more on government demand. During uncertain times, firms also file patents that exhibit a greater textual vagueness. Finally, the evidence suggests that missing R&D helps firms alleviate the negative impact of policy uncertainty on market value.