Information Bundling and Capital Market Feedback: Evidence from Patent Tuesdays

We examine whether bundling the release of information affects managers' ability to gather decision-relevant information from market prices. Using the plausibly exogenous timing of patent grant disclosures by the United States Patent and Trademark Office as a source of variation in the simultaneous release of firm-specific value-relevant information, we show that the market's response to patent grants is more informative for managerial decisions if the firm receives fewer patent grants on the same day. This effect is more pronounced for patents that relate to relatively more exploratory innovative strategies for which feedback is arguably more important. Firms with more distinct information releases also produce more valuable and higher quality innovations in the future. Taken together, our results suggest that bundling the release of multiple pieces of information at once potentially impedes managers' ability to benefit from the market's feedback.