#5141. Paradoxical transparency? Capital market responses to exploration and exploitation disclosure

August 2026publication date
Proposal available till 07-06-2025
4 total number of authors per manuscript0 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Management Science and Operations Research;
Management of Technology and Innovation;
Strategy and Management;
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Abstract:
We draw on information risk theory and paradox theory to examine the additive and combined effects of disclosing exploration and exploitation information on cost of equity capital. We build on theory that presupposes that the information disclosed by a firm about its innovation activities will reduce information risk of investors. However, the bulk of market benefits are driven by exploitation rather than exploration disclosures—except for R&D-active firms that are rewarded for exploration disclosure. We also find that the combined disclosure is negatively associated with cost of equity capital, with the sub-population of R&D-active firms particularly accruing synergies from combined disclosure of both exploration and exploitation. We discuss implications for information-type-dependency in information-risk theory, the outward projection of internal paradoxes, capital market valuations of disclosure by R&D-active firms, opportunity-seeking by large publicly listed corporations, and policy implications.
Keywords:
Ambidexterity; Content analysis; Cost of capital; Disclosure; Exploitation; Exploration; Information risk; Innovation; Paradox; R&D

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