Pressure from Parallels: The Role of Accounting Comparability in Shaping Corporate Innovation

Abstract

This paper examines how accounting comparability influences firms’ innovation resource allocation, with a particular focus on R&D intensity. We find that firms facing higher comparability pressure invest more aggressively in R&D, driven by heightened competition and greater external supervision. Using exogenous shocks and instrumental variable approaches, we establish a causal relationship. The effect is especially pronounced in innovative firms, non-state-owned enterprises, firms with limited institutional monitoring, and those with extensive innovation disclosure. We further show that the combination of comparable accounting information and excessive R&D intensity enhances corporate valuation, whereas neither factor alone is sufficient to achieve this effect. However, excessive R&D intensity also has adverse effects, including reduced marginal innovation efficiency and the crowding out of green innovation. These findings underscore the dual role of accounting comparability in both amplifying innovation investment and shaping its economic consequences.

Keywords: Accounting information comparability, R&D intensity, Information disclosure, Resource allocation decision