Simultaneous Information Releases and Capital Market Feedback: Evidence from Patent Tuesdays
We examine whether the simultaneous release of information affects managers' ability togather decision-relevant information from market prices. Using the plausibly exogenoustiming of patent grant disclosures by the United States Patent and Trademark Officeas a source of variation in the simultaneous release of value-relevant information, weshow that the market's response to patent grants is more informative for managerialdecisions if the firm receives fewer patent grants on the same day. This effect is morepronounced for patents that relate to relatively more exploratory innovative strategiesfor which feedback is arguably more important. Firms with more distinct informationreleases also produce more valuable and higher quality innovations in the future. Takentogether, our results suggest that bundling the release of multiple pieces of informationat once potentially impedes managers' ability to benefit from the market's feedback.