Public Firm Presence, Financial Reporting, and the Decline of U.S. Manufacturing

65 Pages Posted: 14 Aug 2019 Last revised: 2 Oct 2019

See all articles by Stephen Glaeser

Stephen Glaeser

University of North Carolina (UNC) at Chapel Hill - Accounting Area

James D. Omartian

University of Michigan - Ross School of Business

Date Written: August 11, 2019

Abstract

We document evidence of a positive association between public firm presence and import competition. Using cross-sectional differences in the expected costs of the Sarbanes-Oxley Act as an instrument for changes in public firm presence after the Act, we find evidence that changes in public firm presence cause changes in import competition. Subsequent mechanism tests suggest that this effect arises in part because U.S. securities regulation requires public firms to prepare and make publicly available audited financial reports. Although these reports are purportedly for the benefit of investors, our mechanism tests suggest that foreign competitors also make use of the performance and investment information disclosed in these reports to compete with U.S. firms.

Keywords: Competition, Trade, Private Firms, Public Firms, Financial Reporting, Proprietary Costs, Disclosure Externalities

JEL Classification: F14, F16, G18, G38, L60, M41

Suggested Citation

Glaeser, Stephen and Omartian, James D., Public Firm Presence, Financial Reporting, and the Decline of U.S. Manufacturing (August 11, 2019). Kenan Institute of Private Enterprise Research Paper No. 19-28. Available at SSRN: https://ssrn.com/abstract=3435834 or http://dx.doi.org/10.2139/ssrn.3435834

Stephen Glaeser (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Accounting Area ( email )

McColl Building
Chapel Hill, NC 27599
United States

James D. Omartian

University of Michigan - Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI 48109-1234
United States

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