Reporting Regulation and Corporate Innovation

Matthias Breuer, Christian Leuz and Steven Vanhaverbeke

No 26291, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate the impact of reporting regulation on corporate innovation. Exploiting thresholds in Europe’s regulation, we find that forcing firms to publicly disclose financial statements reduces their innovation activities but does not reduce industry-wide innovation spending. Our findings suggest that reporting regulation imposes proprietary costs on innovative firms, especially smaller ones, thereby discouraging their innovation activity. By extending disclosure requirements to smaller firms, the EU regulation also provides positive information spillovers to other firms (e.g., competitors, suppliers, and customers), especially larger ones, resulting in a concentration of innovation activity. We corroborate these results with an analysis of reporting changes due to a German enforcement reform. In sum, we show financial reporting regulation has aggregate and distributional effects on corporate innovation that are important for policy makers to consider.

JEL-codes: K22 L51 M41 M48 O43 O47 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-acc, nep-cfn, nep-eur, nep-law and nep-reg
Note: CF IO LE PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.nber.org/papers/w26291.pdf (application/pdf)

Related works:
Working Paper: Reporting regulation and corporate innovation (2021)
Working Paper: Reporting Regulation and Corporate Innovation (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:26291

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w26291

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().