Reporting regulation and corporate innovation
- We investigate the impact of reporting regulation on corporate innovation. Exploiting thresholds in Europe’s regulation and a major enforcement reform in Germany, we find that forcing firms to publicly disclose their financial statements discourages innovative activities. Our evidence suggests that reporting regulation has significant real effects by imposing proprietary costs on innovative firms, which in turn diminish their incentives to innovate. At the industry level, positive information spillovers (e.g., to competitors, suppliers, and customers) appear insufficient to compensate the negative direct effect on the prevalence of innovative activity. The spillovers instead appear to concentrate innovation among a few large firms in a given industry. Thus, financial reporting regulation has important aggregate and distributional effects on corporate innovation.
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| Author: | Matthias Breuer, Christian LeuzORCiDGND, Steven Vanhaverbeke |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-616487 |
| DOI: | https://doi.org/10.2139/ssrn.3449813 |
| Parent Title (English): | LawFin working paper ; No. 8 |
| Series (Serial Number): | LawFin Working Paper (8) |
| Publisher: | Center for Advanced Studies on the Foundations of Law and Finance, House of Finance, Goethe University |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2020 |
| Year of first Publication: | 2020 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2021/09/09 |
| Tag: | Disclosure; Financial Reporting; Growth; Innovation; Patents; Regulation |
| Page Number: | 91 |
| Last Page: | 18 |
| Note: | Another version of this paper is available at: Breuer, Matthias and Leuz, Christian and Vanhaverbeke, Steven, Reporting Regulation and Corporate Innovation (December 20, 2021). Center for Financial Studies Working Paper No. 675, 2021, Available at SSRN: https://ssrn.com/abstract=3990123 or http://dx.doi.org/10.2139/ssrn.3990123 |
| Institutes: | Rechtswissenschaft / Rechtswissenschaft |
| Wirtschaftswissenschaften / Wirtschaftswissenschaften | |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Wissenschaftliche Zentren und koordinierte Programme / Sustainable Architecture for Finance in Europe (SAFE) | |
| Wissenschaftliche Zentren und koordinierte Programme / DFG-Forschergruppen / Foundation of Law and Finance | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| 3 Sozialwissenschaften / 34 Recht / 340 Recht | |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
