AccSus Publication in the Journal of Accounting and Economics

How does reporting regulation affect corporate innovation?

AccSus member Matthias Breuer (with coauthors Christian Leuz and Steven Vanhaverbeke) addresses this question in their new article published in the Journal of Accounting and Economics:

Reporting Regulation and Corporate Innovation

The paper finds that forcing firms to disclose financial statements reduces the number of innovating firms and the average firm’s innovation spending, but it does not reduce industry-wide innovation. The regulation imposes proprietary costs that discourage innovation, especially by smaller firms, while providing positive spillovers to other firms, especially larger ones. Overall, innovation becomes concentrated among fewer, mostly larger firms.

Read the paper here: https://www.sciencedirect.com/science/article/abs/pii/S0165410125000059