How Does Financial‐Reporting Regulation Affect Industry‐Wide Resource Allocation?

Journal of Accounting Research, Volume 59, Issue 1

Posted: 18 Mar 2021

Multiple version iconThere are 3 versions of this paper

Date Written: March 1, 2021

Abstract

This paper examines the impact of mandatory reporting and auditing of firms’ financial statements on industry‐wide resource allocation. Using threshold‐induced variation in the share of mandated firms in a given industry, I document that reporting mandates facilitate ownership dispersion in capital markets and spur competition in product markets. I, however, do not find that reporting mandates unambiguously improve the efficiency of industry‐wide resource allocation. With respect to auditing mandates, I find only that they impose a fixed cost on firms, deterring smaller entrants.

Keywords: financial-reporting regulation; disclosure; auditing; competition; resource allocation

JEL Classification: K22, L51, M41, M42, M48, O43, O47

Suggested Citation

Breuer, Matthias, How Does Financial‐Reporting Regulation Affect Industry‐Wide Resource Allocation? (March 1, 2021). Journal of Accounting Research, Volume 59, Issue 1, Available at SSRN: https://ssrn.com/abstract=3806658

Matthias Breuer (Contact Author)

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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