Reporting Regulation and Corporate Innovation

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: LawFin Working Paper ; No. 8

Classification and Topics

• Classification: Wirtschaft ; Business and Securities Law ; Economics of Regulation ; Accounting ; Auditing ; Accounting and Auditing: Government Policy and Regulation ; Institutions and Growth ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
• Subject: Financial Reporting ; Disclosure ; Regulation ; Innovation ; Patents ; Growth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Breuer, Matthias ; Leuz, Christian ; Vanhaverbeke, Steven
• Event: Veröffentlichung
• (who): Goethe University, Center for Advanced Studies on the Foundations of Law and Finance (LawFin)
• (where): Frankfurt a. M.
• (when): 2020

Further information

• DOI: doi:10.2139/ssrn.3449813
• Handle: http://hdl.handle.net/10419/244688
• URN: urn:nbn:de:hebis:30:3-616487
• Last update: 14.03.2025, 12:43 AM CET