Voluntary Disclosure and Corporate Innovation

Posted: 16 Jan 2019

See all articles by Sheng‐Syan Chen

Sheng‐Syan Chen

National Chengchi University

Chia-Wei Huang

National Taiwan Normal University

Chuan-Yang Hwang

Nanyang Technological University (NTU)

Yanzhi Wang

National Taiwan University - Department of Finance

Date Written: January 8, 2019

Abstract

We examine whether a firm’s voluntary disclosures, proxied by management earnings forecasts, affect its innovation activity. A firm making more disclosures generates fewer patents and lower-quantity patents. Enactment of SOX is applied as a natural experiment for an exogenous shock to voluntary disclosure. Corporate innovation is reduced for accelerated filers, especially after SOX becomes effective. Nondedicated institutional ownership, R&D spillover, and rival firms’ innovation are higher for accelerated filers after SOX. There is more of a negative effect of voluntary disclosure on innovation activity when product markets are highly competitive, industry information diffusion is speedy, and disclosures are more informative.

Keywords: Innovation; Patent; Voluntary Disclosure; SOX

JEL Classification: D82; G38; M41; O31

Suggested Citation

Chen, Sheng-Syan and Huang, Chia-Wei and Hwang, Chuan-Yang and Wang, Yanzhi, Voluntary Disclosure and Corporate Innovation (January 8, 2019). Available at SSRN: https://ssrn.com/abstract=3311932

Sheng-Syan Chen

National Chengchi University

No. 64, Sec. 2, ZhiNan Rd., Wenshan District
Taipei 116, 116
Taiwan

Chia-Wei Huang (Contact Author)

National Taiwan Normal University ( email )

No. 162, Section 1
Heping East Road
Taipei City, Da’an District 106
Taiwan

Chuan-Yang Hwang

Nanyang Technological University (NTU) ( email )

Singapore, 639798
Singapore
65-67905003 (Phone)
65-6791-3697 (Fax)

Yanzhi Wang

National Taiwan University - Department of Finance ( email )

1, Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

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