This paper examines the role of peer firm disclosures in shaping corporate research and development (R&D) investments. Drawing on models of two‐stage R&D races, I hypothesize that a firm could be either deterred or encouraged by peer disclosure of interim R&D success, depending on peer firms’ R&D strength in the race. Using granular, project‐level data on clinical trials in the drug development process, I find that a firm's R&D investments in a specific therapeutic area are deterred by disclosures of early‐phase trial initiation from strong rivals in the same area but encouraged by disclosures from weak rivals. Cross‐sectional analyses show that focal firm strength and disclosure relevance moderate the effects of peer firm disclosure. Overall, my evidence suggests that peer firms’ R&D disclosures can have both proprietary costs and deterrence benefits.