Earnings Variability and Disclosure of R&D: Evidence from Press Releases

Dan Weiss, Haim Falk, Uri Ben Zion

Research output: Contribution to journalArticlepeer-review

10 Scopus citations


This study explores press releases in the pharmaceutical industry to expand our understanding of how investments in R&D outlays influence uncertainty of future earnings. The findings make two contributions to the literature. First, they provide evidence that equal investments in different R&D ventures are associated with differential variability of future earnings. This result suggests that non-financial information contained in press releases captures attributes of firm-specific R&D investments that are not revealed through R&D expenditures reported in financial statements. Second, prior studies have indicated that investments in pharmaceutical R&D are associated with the highest variability of future earnings among all industries. The results, however, suggest that for a large class of low-risk pharmaceutical R&D investments, the relative variability of future earnings is low and similar to that generated by capital expenditures. The findings hold when we control for endogeneity in voluntary disclosure of press releases.

Original languageEnglish
Pages (from-to)837-865
Number of pages29
JournalAccounting and Finance
Issue number3
StatePublished - 1 Sep 2013


  • Disclosure
  • Earnings variability
  • Press releases
  • R&D

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)


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