This study examines the effect of regulatory approval on a firm's voluntary product‐level disclosures. We focus on the US biotechnology industry, a setting that allows direct observation of whether firms disclose more information as products proceed through well‐defined—though successively more complex and costly—regulatory hurdles. Consistent with predictions motivated by biotech firms' need to repeatedly raise capital, we find that firms disclose more as their products move to later stages in the development process, both when the products receive regulatory approvals as well as when they receive regulatory denials. In addition, these findings are consistent across phases of development as well as product disclosure categories and are accentuated for firms without internal sources of capital (i.e., lacking product revenue). Collectively, these findings reveal that biotechnology firms respond to the considerable incentives to provide enhanced product disclosure and thus facilitate their ongoing need for capital to proceed through subsequent stages of product development.

This paper examines managers' strategic use of counterpoised disclosure, defined as the concurrent dissemination of product information to mitigate the expected impact of a material negative disclosure about another product. We focus on the biopharmaceutical industry, where individual drug outcomes have significant valuation implications. As such, investors rely heavily on product‐level disclosures in this industry, which is characterized by high uncertainty, information asymmetry, and limited traditional financial metrics. Using 8‐K filings and press releases (8‐Ks/PRs) reporting drug development milestones, we empirically support three predictions. First, managers are more likely to provide counterpoised disclosures in 8‐Ks/PRs revealing negative news (e.g., Food and Drug Administration [FDA] rejections) than those revealing positive news (e.g., FDA approvals). Second, we confirm that such disclosures attenuate negative market reactions. Last, we document that counterpoised drugs are more likely to progress through subsequent FDA approvals as compared with those that do not receive counterpoised disclosure. Combined, our findings suggest counterpoised disclosure reflects a strategic managerial disclosure mechanism used to assist investors in assessing the valuation implications of a negative product signal within the firm's broader drug development portfolio.