Eventi del

13 2019 10:00 - 12:30
Accounting Department, Room 5-b3-sr01, 5th floor, Roentgen building

Mandated Financial Reporting and Corporate Innovation

Christian Leuz, Joseph Sondheimer Professor of International Economics, Finance and Accounting, University of Chicago, Booth School of Business.

We investigate the impact of reporting regulation on corporate innovation activity.
Exploiting thresholds in Europe’s regulation and a major enforcement reform in
Germany, we find that forcing a greater share of firms to publicly disclose their
financial statements reduces firms’ innovative activities at the industry level. At the
same time, it increases firms’ reliance on patenting to protect their innovations, to the
extent they continue innovating. Our evidence is consistent with reporting mandates
having significant real effects by imposing proprietary costs on innovative firms, which
diminishes their incentives to engage in innovative activities. Importantly, we examine
and find that this decline in innovative activity is not fully compensated by positive
information spillovers (e.g., to competitors, suppliers, and customers) within
industries. Thus, our evidence implies that proprietary costs induced by reporting
mandates are important consideration for regulators and policy makers.