Access to Financial Disclosure and Knowledge Spillover
Publication in refereed journal
Officially Accepted for Publication
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AbstractAccess to firms’ innovation outputs determines the extent of knowledge spillover that poses risk to innovation appropriability. We provide plausibly causal evidence that processing costs of financial disclosures, which inform users of the economic value of innovation, play a key role in firms’ management of knowledge spillover. We exploit an exogenous, randomly assigned, and staggered policy shock by the SEC that reduces processing costs of mandatory financial disclosures. In response, firms reduce patenting rates, with the effect concentrated among firms in more competitive industries and with lower costs of capital. Firms also reduce their patent disclosure quality. Our results suggest firms rely more on trade secrecy as their innovation property protection mechanism. Lower processing costs of financial disclosures affect neither innovation inputs nor voluntary disclosure practices. Our results show that firms strategically manage access to their innovation outputs through financial disclosures, patent disclosures, and trade secrecy to curb knowledge spillover.
Acceptance Date28/03/2024
All Author(s) ListYen-Cheng Chang, Kevin Tseng, Tzu-Wen Yu
Journal nameAccounting Review
Year2024
PublisherAmerican Accounting Association
Place of PublicationUnited States
ISSN0001-4826
LanguagesEnglish-United States
Keywordsdisclosure, knowledge spillover, trade secrets, patents, innovation, EDGAR
